Performance audit, Pioneers' Home and Hospital for Disabled Miners

PERFORMANCE AUDIT
PIONEERS' HOME
AND HOSPITAL FOR DISABLED MINERS
Report to the Arizona Legislature
By the Auditor General
December 1986
DOUGLAS R NORTON, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
December 8, 1986
Members of the Arizona Legislature
The Honorable Bruce Babbitt, Governor
Merle Farmer, Superintendent
Pioneers ' Home
Transnitted herer~ itb is a report of the Pucitcr Ceneral, Performance
A u d i t of the Pioneers' Home end the Hospital for Disabled Niners. This
report i s i n response to the Jtily 26, 1? F5 resol~ ltion of the J o i ~ t
Legislative Oversight Comi ttee.
The report addresses the need for the Pioneers' ticre and examines i t s role
i n providina long- term care for elderly Arizonans. The audit found that
the purpose of the Hcme has chan9ed since i t was created i n 1911.
Criginally, the Home cared for the nien and women who settled the Arizona
Territory. Today the Hcme cares for a mall segment of Arizona's
elderly. The audit also found that the Pioneers' Home has inappropriately
used funds from the Hospital for Dis~ bled F4iners Endowment Fund to care
for non- miners who live a t the Home. In addition, the report recommends
that the Home strengthen its procedures for eval uating residents'
financial a b i l i t y to pay for their care a t the Hone.
l4y staff and I will be pleased to c'ircuss or c1 arify items i n the report.
Respectfully submitted,
DOUCRJI. U No rton
Auditor General
Staff: Uil 1 iaa Thonson
Mark Fleming
Nancy Lcvell
Patricia !+ I. Krueger
Cindy G. Whi taker
Joseph D. Moore
Enclosure
2700 NORTH CENTRAL AVE. SUITE 700 PHOENIX, ARIZONA 85004 ( 602) 255- 4385
SUMtlARY
The Office of the Auditor General has conducted a per
Arizona Pioneers' Home and the Hospital for Disabled
a July 26, 1985, resolution of the Joint Legislativ
This performance audit was conducted as a part of
forth in Arizona Revised Statutes ( A. R. S.) SS41- 2351
A1 though statutorily establ ished as separate inst1 t u r ; I ul13, ... -
Pioneers' Home ( APH) and the Hospital for Disabled Miners currently
operate as a single, State funded, long- term care facility. The Home is
located in Prescott and presently houses 152 residents, five of whom are
miners. Admission i s based on eligibility requirements specified in
A. R. S. SS41- 923 and 41- 942. The Home i s funded by General F~ ind
appropriations, earnings from Endorment Funds and donations. Residents'
payments for care offset General Fund appropriations.
The Need For The Pioneers'
Home Is Changing ( see pages 15 through 24)
The purpose of the Arizona Pioneers' Home has changed since i t s creation
in 1509. The Home was originally established for Arizona pioneers who
had contributed t o the development of the Territory and State in i t s
early years. APH has met this goal by providing high quality care a t a
reasonable cost. However, statutes no longer require applicants to have
been actively involved in the development of Arizona. As a result,
APH's role i s now shifting to a nursing home for long- time Arizona
residents. Currently, only 31 percent of APH residents can be
considered pioneers. ;: oreover, PPP serves only a small portion of
Arizona ' s elderly population needins 1 ong- term care. Of the
approximately 5,600 publ icly supported people in 1 ong- term care
facil i ties, APH accounts for approximately 3 percent. blast publ icly
funded long- term care in Arizona is provided by the counties. Expanding
the State's role in providina indisent lonptern care would
Siani ficantly exceed APE'S annual appropriation. Because the Home no
longer serves a unique purpose and i t s ability to neet stateride needs
for long- term care is l i ~ i t e d , the Lezislature needs to deterpine if RPH
i s s t i l l needed.
continued as a residence for Arizona's elderly, at least
I d be addressed. First, the population to receive care
clearly defined. P, lthough tax supported health care
ona are for the indiaent, APH statutes currently do not
require residents to be indigent. Further, more emphasis should be placed
on serving a statewide population. Second, the ability of the existing
building t o meet increasing needs for skilled nursing care should be
considered. In addition, a1 though the facil ity i s we1 1 maintained, recent
DHS inspections express concern over some structural items due to the ase
of the building.
The Arizona Pioneers' Home Has
Inappropriately Expended Money From
Ihe Miners' Hospital Endowment Fund ( see pages 25 through 30)
APH's use of the Miners' Hospital Endowment Fund violates the Arizona
Enabling Act. In the last 14 years APH has expended more than $ 3 million
from the Iliners' Hospital Endowment Fund and approximately 95 percent of
these expenditures may have been for purposes other than the care of
miners. The Fund was created to support a disabled miners' hospital as
required by the Arizona Enabling Act. However, the State never built a
miners' hospital. Instead, i t has allowed disabled miners to be admitted
t o and cared for at the Arizona Pioneers' Home, although APH i s not
certified as a hospital. A Legislative Council Opinion states that the
use of the Fund fcr any purpose other than the care of disabled miners in
a miners' hospital i s inappropriate. Continued violation of the terms of
the Enabl i ng Act increases the State's potential 1 iabil i ty.
The Legi sl atere sholil ( 1 discontinue appropristing, and Apt! shoul d
discontinue using, any money frcm the Pliners' Hospital Endowment Fund. To
resolve problem with future use of the Fund, the State should petition
Congress for a change in the Enabling Act.
The Arizona Pioneers' Home Eleecs To Improve
Its Payment For Care Determinations ( see pages 31 through 35)
APH needs t o strengthen i t s process for determining how much resicients
should pay for their care. A. E. S. S41- 923 and RPH pol icy require APH
residents tc pay monthly fees, based on their ability t o pay, for costs
incurred by the State for their care. A review of recent APH admission
files indicates that APH staff generally exclude nonincome- producina
assets, principally real estate and personal property, such as
automobi1es, i n determining an appl icant's ability t o pay. Further,
varied treatment of assets i n determining payments for care has resulted
in inconsistent treatment of some residents.
The Home also needs to establish a policy of including i n payment for care
determinations the fair market value of assets disposed of within a
specified period of time prior to admission or during residency a t APH.
In addition, APH shoul d verify financial information submitted by
appl ican ts.
TABLE OF CONTENTS
Pa9e
INTRODUCTION AND BACKGROUI.! D . . . . . . . . . . . . . . . . . . . . . 1
FINDING I: THE h! EED FOR THE PIONEERS'
HOP. IE IS CHAIJGING . . . . . . . . . . . . . . . . . . . . . . . . 15
Purpose Of The Home Has Changed . . . . . . . . . . . . . . . . . 15
The Need For The Pioneers' Home
Should Be Evaluated . . . . . . . . . . . . . . . . . . . . . . . 17
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . 23
FINDING 11: THE ARIZONA PIONEERS' HOME HAS
INAPPROPRIATELY EXPENDED MONEY FROM THE
HOSPITAL FOR DISABLED !< IIMERS' ENDOWbIENT FUND . . . . . . . . . . 25
Required ' Hospital Not Establ ished . . . . . . . . . . . . 25
State May Be Liable For Inappropriate Use Of
Funds And l\! oncompl iance Mi t h Enabl ina Act . . . . . . . . . . . . 27
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . 30
FIMDING I11 : THE ARIZONA PIONEERS' DO? i. E NEEDS
TO If4PROVE ITS PAYMEMT FOR CARE DETERMINATIO!~ S . . . . . . . . . 31
APH Does Not Adhere To State Law In
Determining Residents' Ability To Pay For Czre . . . . . . . . . 31
APH Needs To Strengthen I t s Policies
AndAdhereToThem . . . . . . . . . . . . . . . . . . . . . . . 33
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . 35
OTHER PERTINENT INFORMATION . . . . . . . . . . . . . . . . . . . . . 37
Personal A1 1 owance Deduction . . . . . . . . . . . . . . . . . . 37
AREAS FOR FURTHER AUDIT . . . . . . . . . . . . . . . . . * . .
AGENCY RESPONSE
Legislative Council Memorandum
APPENDIX
LIST OF TABLES
Page
TABLE 1 - Arizona Pioneers' Home And
The Miners ' Hospital
Expenditure And Budget Detail
F( Uisncaaul diYteedar) s . 1.98.3-. 84. T. hr. ou. gh. 1.98.6-. 87. . . . . . . . . . . . 5
TABLE 2 - Arizona Pioneers' Home And
The Miners ' Hospital
Staffing . . . . . . . . . . . . . . . . . . . . . . . . . 6
TABLE 3 - Year APH Residents Entered Arizona . . . . . . . . . . . . 16
TABLE 4 - Indigent Persons Receiving
Lon$- Term Care By County . . . . . . . . . . . . . . . . . 18
LIST OF FIGURES
FIGURE 1 - Arizona Pioneers' Home And
The Hospital For Disabled Miners
Revenue Sources For Expenditures During
Fiscal Year 1985- 86 . . . . . . . . . . . . . . . . . . . 4
FIGURE 2 Statewide Distribution of Elderly
Pcpul ation By County Compared To
Residence of APH Residents A t Time Of Admission . . . . . 2 1
INTRODUCTION AND BACKGROUND
The Office of the Auditor General has conducted a performance audit of the
Arizona Pioneers' Home and the Hospital for Disabled Miners in response to
a July 26, 1985, resolution of the Joint Legislative Oversight Committee.
This performance audit was conducted as part of the Sunset Review set
forth in Arizona Revised Statutes ( A. R. S. ) SS41- 2351 through 41 - 2379.
The Arizona Pioneers' Home ( APH) and the Hospital for Disabled Miners
currently operate as a single, State funded, long- term care institution
located in Prescott. The Pioneers' Home was established in 1G09 and
opened in 1 The Hospital for Disabled was statutorily
established in 1929, as required by the Arizona Enabling Act, and a1 though
a separate facility was never built the Hospital i s located in the
Pioneers ' Home.
The goal of APH i s to " provide a home into which qualified applicants may
enter and reside in an atmosphere that i s pleasant, secure and dignified
- meeting individual needs of lodging and health care." The site where
APH now stands was deeded to the State to provide a home for people who
had lived in and contributed to the development of the Territory. The
f i r s t residents of the Home were men. Women were admitted be3innina i n
1916 when the Home was willed money t o build an addition for them.
The purpose of the Hospital for Cisabled Miners was to care for miners who
had sustained injuries while working in the mining industry or who were
financial ly unabl e to support themsel ves . The statute a1 so provided that
the Superintendent of APH oversee the miners' hospital as well. Although
a hospital facility was never built, i t exists in statute and APH staff
consider the Hospital for Disabled ! liners to be a part of the Pioneers'
Home.
Admissions Reauirements
Arizona Revised Statutes set forth qualifications for admission to APH and
the Hospital for Di sabl ed Miners ' .
1
A. R. S. $ 41- 923 provides that a person i s eligible to be admitted to APH
who:
@ i s and has been a citizen of the United States and the State of
Arizona for five years prior to application for admission;
@ has been a continuous resident of Arizona for not less than 30
years;
@ i s unable to provide himself w i t h the necessities and ordinary
comforts of 1 i fe because of adverse circumstances, f a i l ing heal t h
or other d i s a b i l i t i e s ; and
o does not require care i n a hospital or skilled or intermediate
care nursing home a t the time of admission.
Likewise, A. R. S. S41- 942 provides that a person nay be admitted to the
Hospital for Disabled Miners who:
s has been employed in the mining industry i n Arizona for 20 years;
@ i s a citizen of tile United States and the State of Arizona;
s i- ias been a resident cf P, rizona for not less than 35 years;
s i s 60 years or 01 der; and
CP i s financially unable to support. himself, or !-; as suffered
incapacitatinc injuries from and i n the course of mining.
As of July 1, 1986, there were 157 residents in APH, five of whom were
miners. Residents cone predominately from Yavapai 2nd I. laricopa counties.
Yavapai Ccunty residents make up approximately 55 percent of the Home's
population, with another 20 percent from Maricopa County. APH residents
currently range from 68 to 101 years of age, w i t h an average ace of 86.
Orqanization and Services
When APH was i n i t i a l l y created i t bias placed unc'er the charge and
management of the Board of Control of the Territory of Arizona. Later the
Governor assumed total responsibility. In 1973 the Director of the
Department of Health Services ( DHS) was made the responsible official for
APH. While under the auspices of DHS, the Pioneers' Home was maintained
as a 1 icensed 1 ong- term care facil i ty. In 1976, however, responsibil ity
for the Home was returned t o the Governor, who appoints the
Superintendent. As a result of this realignment, APH i s n o t required to
be a licensed nursing care facility. However, DHS i s required to inspect
the Hone a t six months intervals.
Although APH, by statute, cannot accept people requiring intermediate or
skilled nursing care, APH provides three levels of care - personal,
intermediate and skilled - for residents who may require such care after
admission. There are currently 188 beds available for APH residents, 64
of which are for people needing skilled care. In addition, a1 though APH
i s not able to provide hospital services a t the Home, residents do receive
these services at area hospital s,
Budqet and Personnel
APH i s funded through the General Fund and through various Endowment and
Donation Funds. Since fiscal year 1983- 84 approximately 82 percent of the
Home's operating costs have been paid from the General Fund. The
remaining costs are paid from the State Charitable - APH Endowment Fund
( 1 0 percent), the Miners " osp- j tal Endowment Fund ( 7.5 percent), and the
Special Donations Fund ( 1 percent). Figure 1 ( page 4) illustrates the
percentage of expenditures from these sources for fiscal year 1985- 86. -
Table 1 ( page 5) presents APH's expenditure detail for fiscal years
1983- 84 through 1985- 86. As shown, expenditures csnsi s t primarily of
personnel- related expenses, food and other operatino costs.
FIGURE 1
ARIZONA PIONEERS' HOME
AND THE HOSPITAL FOR DISABLED MINERS
REVENUE SOURCES FOR EXPENDITURES DURING
FISCAL YEAR 1985- 86
LEGEND
4 Special Donations ($ 31 , I 23) 1.1 %
Figures In parentheels mpreeent expendftures.
Source: Prepared by Auditor General s t a f f based on f i s c a l year 1985- 86
budget information provided by APH s t a f f .
TABLE 1
FTE
ARIZONA P IONEERS ' HOME AND
THE HOSPITAL FOR DISABLED FIIEI'ERS
EXPENDITURE AND BUDGET DETAIL
FISCAL YEARS 1983- 84 THROUGH 1986- 87
( UNAUDITED )
Personal Services
Empl oyee Re1 a ted
Professional and
Outside Services
Travel
Food
Other operating(' )
Personal Services
Empl oyee Re1 a ted
Other
TOTAL
Actual
Fiscal Year
1983- 84
Actual
Fiscal Year
1984- 85
Actual
Fiscal Year
1985- 86
Estimated
Fiscal Year
1986- 87
( 1 ) Other operating ccsts not funded frcm General Fund appropriations
such as personnel , maintenance and medical expenses, are funded
through APH's Endowment and Donation Funds. APH s t a f f indicated
that i n fiscal year 1983- 84 no Endowment Funds were expended for
personnel related costs. The fiscal year 1986- 87 figures are
based on budget and appropriations documents which d i d not
anticipate expenditures for employee re1 ated services.
Source: Prepared by Auditor General s t a f f based on fiscal years 1983- 84
through 1986- t27 budget documents and information provided by APH
s t a f f .
The Endowment Funds were established by the Arizona Enabling Act. T h i s
Act provided lands to be held in trust by the State, from which earninas
are to be tised for the benefit of the Hospital for Disabled Miners and
State charitable institutions, from which APH benefits. As of July 1,
1986, the expendable portior: of the Pliners' tlospital Endowment Fund was
$ 1,274,359, while the State Charitable - APH Endowment Fund had a balance
of $ 514,912. The nonexpendable portion of these Trust Funds, ( funds not
available for agency use b u t which earn money for the expendable funds)
had balances of $ 841,919 and $ 2,539,307, respectively.
In addition, residents entering the Home since Augast 11, 1970, have been
required to pay for the cost of their care to the extent that they are
financially able t o do so. The amount i s limited by s t a t u t e to the
average monthly per capita cost of operating the Home, $ 1 ,535 for the
current fiscal year.* The resident contribution is collected by APH and
deposited into the General Fund. In fiscal years 1983- 84 throuoh 1985- 86,
these col lections represented approximately 19 percent of APHIS total
expenditures. Based on estimates for fiscal year 1986- 87, resident
coll ections will represent about 17 percent of expenditures.
Staffing a t the Pioneers' Home has remained stable a t 110 full- time
equivalent ( FTE) pcsitions for the past several years. However, since APH
makes extensive use of part- time and seasonal employees, 146 people
currently occupy these 110 FTE positions. The s t a f f i s presently
organized along functional lines, as shown in Table 2.
Table 2
ARIZOIJA PIONEERS' HOME AND
THE MINERS' HOSPITAL
STAFF ING
Department FTEs
~ dministrationI) l 10.80
Nursing 58.70
Elai ntenance 7.50
Housekeeping 11.50
Food Services 21.50
Staff
TOTALS 11 0.00 -@-
( I ) Incl uCes administrative, accounting, resident services and
a c t i v i t i e s , and pharmacy personnel.
Source: Conpil ed by Auditor General s t a f f from Arizona Pioneers ' Home
personnel records.
* Currently only one resic'ent pays the maximum amount and, as of July
1 , 1986, 17 paid nothing. Of these 17, s i x a r e miners, four are
exempt because they entered the Home before 1970, and seven have
insufficient income to be assessed.
Audit Scoce and Purpose
This audit was conducted to evaluate the need for and the adequscy of the
Arizona Pioneers' Home and the Hospital for Disabled Miners. Specifically
we examined:
The need for 2nd purpose of the Arizona Pioneers' Home,
0 APH's payment for care policies and procedures, and
o The Home's use of the Miners' Hospital Endob~ ment Fund.
In addition, we developed information concerning the residents' personal
allowance deductions. This is found in Other Pertinent Information ( see
page 37 ) .
l.! e also present the 12 factors that should be considered i n ceternining
whether the Arizona Pioneers' Home and the Hospital for Disabled ! liners
should be continued or terminated. This i s founc! in Sunset Factors ( see
page 3).
This audit \; as performed in accordance with oenerally zccepted
governmental audit standards.
The Auditor Gt? neral and staff express appreciaticn to the Superi nte~ dent
and staff cf the Arizona Pioneers' Hope for their cooperatio~ and
assistance durirq the ccurse of cur audit.
SUEfSET FACTORS
In accordance with Arizona Revised Statutes ( A. R. S.) 541- 2354, the
Legislature should consider the fol1o~: ing 12 factors in determining
whether the Arizona Pioneers' Home ( APH) and the Hospital for Disabled
Miners should be continued or terminated.
The Hospital for Cisabled Miners, which was originally intended to be a
separate institution, was never built. APH s t a f f , however, consider the
Hospital to he an integral part of APH.
1. The objective and purpose in establishing APH and the Hospital for
Disabled Miners
APH was set up to provide a home for Arizona pioneers. The 1309 Act
establishing APH provided that people who met age and residency
requirements, and had " been active in the development of Arizona" were
entitled t o become residents of APH. Thus, the original intent in
establishing APH was t o provide a pioneers' home in which the needs of
people who had lived in and contributed to the development of the
Territory ccul d be net. The statutes have since been modified and the
requirement that people be involved in the develcpment of the State
has been deleted. Alditionally, the number of people who came t o
Arizona prior to statehood has been decreasing. This has resulted in
a shift in APH population t o long- time Arizona residents, rather than
actual pioneers who cane t o 3 frontier territory.
In 1929 the State Legisl ature statutorily estahl ished a State Hospital
for Disabled Fliners t o provide care for miners who had sustained
injuries while working in the mining industry or who were financially
unable to support themselves. The Hospital was to be located adjacent
to APH with the APH superinte~ dent overseeing both f a c i l i t i e s . P
hospital was never built, however. Instead, tviners who lreet
admittance criteria for the hospital are admitted to APH, a1 though APH
cannot provide many hospital services.
2. The effectiveness with vrhich APH has met i t s objective and purpose and
the efficiency with which i t has operated
APH provides quality care for i t s residents a t a reasonable cost to
the State. APH officials indicate that they have met their objectives
by meeting safety and sanitary requirements and maintaining a
home- 1 ike environment for their residents. APH provides personal ,
intermediate and skilled nursing care, and has been commended by the
Arizona Department of Health Services for the excel 1 ent care and
loving, caring environment i t provides for i t s residents. APH
provides i t s services a t a cost comparable to other nursing care
providers in Yavapai County, in which APH i s located.
The resident population of APH, however, i s shifting away from the
State's pioneers to 1 ong- time Arizona residents. The changinp
population indicates that the objective of the Pioneers' Home has
larcely been met. As the number of pioneers from Arizona's early
years diminishes, the original purpose for APH decreases.
The intent of establishing a hospital for disabled miners i s not being
met. Since a hospital for disabled miners was never Suil t, APH has
a @ t~ teid miners who qua1 i fy under hospi ta1 adoi ssionc c r i t e r i a .
However, APH does not provide the levels of care 9eneral ly considered
essential t o a hospital, such as suroery. Becal! se Arizona has never
established a miners' hospital i t may be 1 iitble for inappropriately
usins several mill ion doll ars from the 1: iner- s ' Eospi tal Endo~~ mcnt
Fund, contrary t o the terms of the trust established by the iirizcna
Enabl ing Act.
APH payment for care determinations are not always based on residents'
full financial ability as required by law. APH staff exclude some
assets in determining ability to pay, and APH lacks policies regarding
asset disposition prior t o and during residency at APH. Also, APH
does not. use verified resident financial information, as required by
statute. Furthermore, pol icy appl ication has resul ted in inconsistent
payments among residents.
3. The extent t o which APH has o~ erated within the uublic interest
The public served by APH consists largely of i t s residents and their
families. In this sense, APH i s operating within the public interest
since i t satisfactorily cares for these residents, having been
commended by the Department of Health Services for the qua1 ity care i t
provides.
APH's use of the Miners' Hospital Endowment Fund, however, may not be
in the interest of the general public. Although a hospital for
disabled miners i s required by the Enabling Act and Arizona Revised
Statutes, one has never existed. As a result, the State may be i n
violation of the trust established in the Enabling Act and may be
liable for several million dollars in inappropriate expenditures.
Continued use of this Fund increases the State's potential 1 iabil ity.
4. The extent to which rules anc! regulations promulaated by APH are
consistent with the 1 egi sl ative mandate
According to AQH staff, no rules or regulations have been promuloated
since the need for them has n o t been established.
5. The extent t o which APH has encouraged input from the public before
promulgating i t s rules and regulations and the extent to which i t has
informed the nublic as t o i t s actions and their ex~ ected im~ act on the
Since APH has not promulsated any rules and regulations, this factor
does not apply.
6. The extent tc which APH has been able t o investigate and resolve
comulaints within i t s . iurisdiction
Since APH is not a regulatory agency, this factor does n o t apply.
However, APH does have an informal complaint procedure t o address
residents' complaints.
7. The extent t o which the Attorney General or any other applicable
agency of State government has the authority to prosecute actions
under enabl ing legislation
APH's statutes appear t o be adequate. According t o APH staff, the
only violation addressed in the statutes i s that if a resident refuses
to pay the determined payment for care, he shall be required to leave
APH. The Home's Attorney General representative indicated that
current statutes would be sufficient to prosecute any such case.
8. The extent to which APH has addressed deficiencies i n the enabling
statutes which prevent it from fulfilling i t s statutory mandate
APH staff indicated that the statutes are sufficient to allow them to
f u l f i l l their duties. No legislation has been proposed by APH i n the
last five years and none is contemplated.
9. The extent t o which changes are necessary in the laws of APH t o
adequately comply with the factors listed in the Sunset Laws
Since the composition of the APH is chansing, the Leqislature needs t o
determine whether State supported care for the elderly i s an
appropriate pol icy. Additionally, if the Legislature decides to
continue to become more involved in providing long- term care for the
elderly, consideration should be given to defining what population
should be served.
10. The extent to irhich the termination of APH would significantly harm
the ~ ubilc health. safety or we1 fare
Termination of APH t10~ 7d not sicni ficantly harn: the pcbl ic heal t h ,
safety or welfare, since services provided a t APH are available from
counties or private health care providers. If APH i s closed, however,
the State may have a continuin? commitment t o the pioneers and other
residents currently i n the Home. All of the residents entered APH
with the understanding that they would receive care for the remainder
of their lives.
Additionally, some concern may exist over whether the current
resources of other care providers could handle the sudden influx of
residents should the Home close. For example, Yavapai County may need
t o expend nearly one- third more than i t presently does to provide for
county residents currently cared for at APH.
11. The extent to which the level of reaulation exercised bv APH i s
appropriate and whether less or more stringent levels o f regulation
Since APH is not a regulatory agency, this factor does n o t apply.
12. The extent to which APH has used private contractors in the
performance of i t s duties and how effective use of private contractors
coul d be acconpl ished
APH currently uses private contractors for service delivery, soce
housekeeping and maintenance, and has i denti fie6 areas in which
further contracting may be possible. Home official s indicate that APH
uses private contractors chiefly in the medical field, with various
physicians, 1 aboratories and a kospi tal . Total expenditures for these
contracts, after recovery of insurance claims, was $ 47,1? 2 in fiscal
year 1984- 85. APH also contracts for laundry services, for whicb i t
expended $ 50,831 in fiscal year 1S84- 85. In addition, i t uses private
contractors for various oainten~ nce services, such as for an elevator,
an alarm system, office equipment and pest control services.
APH staff icenti fied areas where further contracting may be possible,
although such uses have not been thoroughly investioated. Some areas
include additional work in maintenance and housekeeping, as we11 as
security, yard upkeep, food services and accounting.
FINDING I
THE NEED FOR THE PIONEERS1 HOME IS CHANGING
The objective of the Arizona Pioneers' Home ( AspH) has changed since the
Home's construction. The original purpose of the Home was to provide for
elderly Arizona pioneers. Currently, only 31 percent of the residents are
pioneers, and the percentage will continue to decrease. The State should
review the need for the Pioneers' Home and evaluate the alternatives for
i t s role in caring for Arizona's elderly.
Purpose Of The Home
Nas Chanaed
The Arizona Pioneers' Home i s no longer exclusively a home for individuals
k ~ h o assisted in the founding and development of Arizona. The Home was
established in 1909 to provide for Arizona's early s e t t l e r s , b u t in recent
years admission requirements have been expanded to include other Arizona
ci tizens. A1 though the Home's current population includes some pioneers,
they no longer represent a majority of the residents. The Home has net
i t s original purpose, b u t i t s roie i s now shifting to a nursins home for
1 ong- time Arizo~ a residents.
Admission requirements have chanced - The provisions for entry into the
Pioneers ' Home have changed significantly since 1909. The original
admission requirements were set forth in 1909 Arizona Territorial Statutes.
Any person of cood character who shall have been a
resident of Arizona for n o t 1 ess than twenty five years
and who shall have been active in the development of
Arizona, and who shall have reached the age of sixty
years or over, and who, because of adverse
circumstances or failing health or other disability,
shall be unable t o properly provide himself with the
necessities and ordinary comforts of l i f e . . . .
[ Emphasis added.]
Legislative intent was t o care for ~ r i z o n a ' s early settlers. IJhen the
Home opened in 1911, individuals meeting the 25 year residency requirement
were people who lived in a frontier society. Early newspaper articles
about the Home refer to i t as a way of rewarding early settlers for the
they faced. Currently, APH residents are required to live 30
Irizona, be 65 years of age and not require skilled nursing care
me of admission.* The requirement that the applicant must have
3d to Arizona's development was deleted by s t a t u t e i n 1978.
f person born i n 1921, entering Arizona i n 1950 and residing
sly i n the State would now be e l i g i b l e to enter the Pioneers'
Home.
The populaticn i s changing - Pioneers now represent a small percentage of
APH residents. The Arizona Historical Society defines a pioneer as one
who entered Arizona i n 1912 or e a r l i e r . Currently, only 45 APH residents
( 31 percent) were born i n or entered the State i n 1912 or e a r l i e r . The
remaining 69 percent do not meet the Historical Society's definition of
pioneer. In addition, of 146 residents of the Home, 32 ( 22 percent)
entered Arizona i n 1940 or l z t e r . Table 3 shows the years APH residents
entered Arizona.
TABLE 3
- Year
TOTAL
Number Entering Arizona Percen taoe
( I ) Total excl udes miners.
Source: Arizona Pioneers ' Home admission records for residents of the
Home on June 1 , 1986.
* According to the Arizona Legislative Council, - any residency
requirerent may be unconstitutional . Leclisl ative Council cited two
cases - ~ hapiro v. Thompson, 3% 0 . S . 618 -( 1969) and Memorial Hcspital
v. Flaricopa County, 415 U. S. 250 ( 1974) - i n which the courts ruled
residency requirements to be unconstitutional . Po~/ ever, neither case
gives a distinct direction pertaining to Pioneers ' Home residency
requirements. U n t i 1 such standards are ruled unconstitutional the
Pioneers' Home must abide by residency requirements.
APH purpose largely achieved - The changing population indicates that the
original objective of the Pioneers' Home has largely been met. As the
number of pioneers from Arizona's early years diminishes, the need for the
Home decreases. APH has achieved i t s goal by providing high quality care
a t a reasonable cost. Recent Department of Health Services ( DHS)
semiannual inspections found only minor violations. Further, DHS
concluded the Home " offers a caring and loving environment with excellent
care provided for i t s residents." The Governor's Office and DHS receive
few complaints from residents or farnil ies concerning APH, and residents
generally had no complaints on care they received. In addition, care i s
provided a t a reasonable cost. For fiscal year 1385- 86 the cost of care,
including all medical expenses, a t APH was approximately $ 45 per day.
This is comparable t o private f a c i l i t i e s i n the vicinity, whose charges
range from $ 23 to $ 65 a day, not including medical expenses.*
The Need For The Pioneers'
Home Should Be Evaluated
The chan~ ing population of the Pioneers' Home raises questions about the
continued need for the Home. Most publicly funded long- term care in
Arizona i s prcvided by the counties. The Home i s the only form of State
supported long- term care in Arizona, and serves only a small portion of
the elderly in need of 1 ong- term care. The Lecislature needs to determine
whether the Pioneers' Home should be continued to serve a limited
population. If the Heme is continued, several critical issues need to be
addressed.
Publicly funded Icnc- term care in Arizona - Assisting individuals in
meeting the costs of long- term care i s largely a county function. With
the exception of the Arizona Pioneers' Home, the State provides l i t t l e
funding for 1 ong- term care .** Each county appropriates funds to support
- provides medical care for i t s residents as required hy A. R. S.
$ 41- 924 B. The Home receives some rei~ bursement for the cost of this
care from resident insurance policies b u t does n o t receive any
payments from the Arizona Health Care Cost Containment System ( see
Area for Further Audit I~ lork, page 39).
** Limited State funding i s now available for counties to provide
1 ong- term care. The 1986 Legi sl ature appropriated $ 5.5 mil 1 ion to
assist counties in meeting the cost of indigent long- term care for
fiscal year 1986- 87.
indigent residents who need 1 ong- term care. Financial c r i t e r i a for
determining e l i g i b i l i t y differs from county to county. Arizona counties
support approximately 5,500 indigents i n 1 ong- term care f a c i l i t i e s ( see
Table 4).
TABLE 4
INDIGENT PERSONS RECEIVING LONG- TERM CARE BY COUNTY
County
Apache
Cochi se
Coconino
Gila
Graham
Green1 ee
La Paz
Maricopa
Mohave
Navajo
Pima
P i nal
Santa Cruz
Yavapai
Y uma
- --
Number
7
187
45
8 1
4 4
20( 1)
13( 1 )
3,000( 1 )
140
6 4
1,175
196
57( 1)
206
200( 1)
Date
September 1986
FY 1985- 86
September 1 986
July 1986
September 1986
September 1986
September 1986
Septenber 1986
September 1986 •
September 1986
FY 1984- 85
September 1986
July 1986
Au~ ust 19F6
August 1986
TO TA L 5,435
) Figures are estimated.
Source: Compiled by Auditor General s t a f f from phone surveys of counties. ( I
Compared w i t h the counties, the Pioneers ' Home serves a very small portion
of the elderly population in need of long- terrr! care. Pioneers' Hone
residents account for approximately 3 percent of the indigent population a
served by the counties.* If the State were to provide funding to meet the
costs of long- term care nok/ provided by the counties, the annual costs
would siani ficantly exceed the $ 2.5 mil 1 ion apprcpriated annual ly t o the
Pioneers ' Home. For example, Yavapai County, w i t h approximately 200 a
indigents receiving county 1 on!- term care, has budgeted $ 1.8 mil 1 ion for
fiscal year 1986- 87.
- k A1 though no current APH residents pay the f u l l c o s t of their care,
most pay for some portion of the care. Assuming that all present ( I
residents are indigent, therefore, overestimates the extent to which
the Pioneers' Home serves indigent Arizonans in need of long- term care.
Thus, the Pioneers' Home provides long- tern care to a sirall portion of
Arizona's elderly. Although the Home once had a unique purpose i n
providing care to early s e t t l e r s , few current residents can be considered
pioneers, and the number will inevitably decl ine. The Legislature
addressed the changing population i n 1970 when i t deleted the requirement
for applicants to demonstrate their active participation i n the
development of Arizona. However, the Legislature needs to determine
whether there is a continuing need for a State supported long- term care
facility that serves such a limited population. The Legislature could
phase out the Pioneers' Home w i t h l i t t l e harm to the public or current
residents. Even if the Pioneers' Home i s terminated, the Legislature
should consider whether the State has a continuing obligation t o care for
the residents inasmuch as all the current residents entered the Home with
the expectation that they would receive care for the remainder cf their
1 ives.
If the Legislature determines i t i s in the State's best i n t e r e s t t o
maintain APH as a residence for the elderly, a number of issues should be
addressed. These issues include the population to be served and the
demands on an aging facility.
Population served - If the Legislature determines that the Pioneers' Home
should be continued, the population t o receive care shculd be more clearly
defined. Generally, tax supported health care systems in Arizona
determine eligibility based on indigency. However, APH does not care only
for those who cannot afford to pay for care. According to an Arizona
Legislative Council Opinion, current statutes do not require residents to
be financially indigent to gain admission. Since admission c r i t e r i a
specify that elderly may need assistance in meetins daily needs, those who
can afford to pay for care are not excluded from residing i n the Hone.*
The Legislature may want to direct the Pioneers' Home to consider
indigency in evaluating applications for admission.
$; If the Home continues to admit financially secure residents, i t should
ensure that the monthly payment for care is based on ability to pay
( see Finding 111).
If the Home i s continued, more emphasis should be placed on serving a
statewide population. Yavapai County residents appear to benefit
disproportionately from the Home. Presently, more residents enter from
Yavapai County than any other county i n Arizona ( see Figure 2, page 21),
a1 though the County has a relatively small elderly population. To ensure
that residents of all counties have equal access to APH, the Home needs t o
provide information t o potential residents i n a1 1 counties.
Facility - To continue to provide high qua1 ity care, APE needs to address
two areas regarding the facility i t s e l f . These areas are the need for
more skilled nursing care and maintenance of an aging facility.
APH will need to increase i t s capacity to provide skilled nursing care.
Skilled nursing care i s required by patients who f i t one or more of the
foll owing characteristics.
s Need assistance of one or more staff person to walk, move from
bed, chairs or t o i l e t , or are bedfast
6 Require maximum assistance in bathing, dressing, grcoming and
feeding
Q Are disoriented, confused, conbative, withdrawn or depressed
a Require complex medications or treatments needing close monitoring
FIGURE 2
STATEWIDE DISTRIBUTION OF ELDERLY POPULATION BY COUNTY
COMPARED TO RESIDENCE OF APH RESIDENTS AT TIME OF ADMISSION
Maricopa
57%
0" 2P0i. m25a6
Coconino 1.2% Others *
17.4%
Yavapai 4.3%
Statewide Population 65 And Over
Coconino 2.6%
Others * 6.6%
Maricopa
30.3%
Yava pal
54.6%
Residence At llme Of Admission To APH
* Others represents the remaining counties i n Arizona. Navajo county
had f i v e people enter APW, the counties o f Apache, Gila, Graham,
Mohave and Yuma had one person each enter the Horne. The counties o f
Cochise, Greenlee, La Paz, Pinal and Santa Cruz d i d not have anyone
e n t e r t h e Home.
Source: Csmpi l e d by Auditor General s t a f f from Pioneers " om Admission
records f o r 152 current residents o f the Home as o f June 1 , 1986,
and from Long- Term Care i n Arizona, July 1984.
Skilled nursing care a t APH has more than doubled over the past three
years. In 1983 APH averaged eight individual s receiving ski1 led nursing
care each month. In 1986 the monthly average increased t o more than 18
people. The Director of Nursing believes that the Home needs to consider
alternatives for increasing the number of skilled nursing beds. As more
APH residents require skilled nursing care, additional s t a f f , equipment
and medical supplies will be necessary to meet the residents' needs. The
Home will need to consider those future needs in allocating resources.
In addition, the facility itself may be inadequate to meet the future
needs of residents. A1 though APR maintains the facility very well, i t
does not meet the current requirements for long- term care f a c i l i t i e s in
Arizona. The Department of Health Services conducted a special inspection
of APH a t the request of the Auditor General and found that i t d ~ e s n o t
meet the requirements that would apply if the Home were a licensed
institution. The major deficiencies invo7ve fail urc ts meet National Fire
Protection standards for health care institutions. Far example, a1 1
floors lack smake partitions, all stairs do not meet exit access
specifications, some f i r s t floor corridors dead end, and some office room
doors are n o t smoke tight. The inspectors also found that t o i l e t rooms,
bathrooms, u t i l i t y rooms and janitors' closets on a11 floors d i d n o t have
mechanical ventilation as required by State regul atisns."
A Joint Legislative Budget: Gonlmittee ( JLBG) staff study shows i'
Pioneers' Home ta be the second oldest facility i n the statewide building
inventory. JLBC staff cor. scIuf% ed that the maintenance needs of buildings
increase as the building ages. For ' 1985, JLBC staff estimated that the
Pioneers' Home would need $ 159,100 ( 3.8 percent of the building's value)
JC APH stF= ra1 deficiencies are even greater when compared to 13HS
construction standards fcr new f a c i l i t i e s . To meet these standards
DHS inspectors found t h a t : 811 corridors i n the Home would need to be
widened to 8 feet, a% l exit doors wsul d need to be widened, as would
any patients' doors t h a t have not already been modified, and each
floor would need to have a nurses station, The inspectors also noted
" many othcr mechanical, electrical and plumbing requirements that will
add significantly to this la" st." TBheir report cites as examples
addi tional electrical cutlets, msdi f- ication of mechanical systems and
additional pl umbing f i x t u r e s ,
to properly maintain the structi~ re. In contrast, JLBC s t a f f ' s next
highest estimate for other buildings on State inventory was 1.7 percent of
the bui 1 dings ' current val ue.
CONCLUSION
The Arizona Pioneers ' Home is no longer needed to meet i t s original goal .
The objective of the Home has been modified since i t was constructed in
1911. The Legislature should evaluate the continued need for the Home.
If APH i s continued, the population to be served and the ability of the
existing building t o meet future needs should be considered.
1. The Legislature should review the role of the Arizona Pioneers' Hor- e
in prcviding long- term care t o the elderly. The followin9 shoui d be
considereo.
a. Whether the Pioneers' Home should be continued.
b. If the Home is continued, what specific population group shouic'
be served:
e indisents,
long- term residents of the State,
any other group.
c. If the Heme is not continued, how to provide appropriate care for
the Home's current residents.
2. If the Picrieers' Home i s continued, the Home should c'eter~ ine and
utilize the best means of advertising i t s services to potential
residents throuchout Arizona.
3. The Arizona Pioneers' Home should develop rt plan, in conjunction with
the State's five- year land, building and improvements planning
process, to ensure that the facility continues to adequately serve the
needs of i t s residents.
FINDING I1
THE ARIZONA PIONEERS ' HOME HAS INAPPROPRIATELY EXPENDED
MONEY FROM THE MINERS' HOSPITAL ENDOWMENT FUND
The Arizona Pioneers ' Home ( APH ) has inappropriately expended money from
the Fliners' Hospital Endoranent Fund. A1 though a hospital for disabled
miners i s required by the Enabling Act and Arizona s t a t u t e s , one has never
existed. As a result, the State may be in violation of the trust
established i n the Enabling Act, and may be l i a b l e for several million
dollars of inappropriate expenditures.
Required Miners ' Hospital
Not Establ ished
Althou~ h the Arizona Enabling Act and Arizona Revised Statutes ( A. R. S.)
direct the State to establish a hospital for disabled miners, one has
never existed. The United States government, i n bestowing Arizona
statehood, set aside a certain portion of land to be held i n t r u s t by the
State, proceeds from which are intended for named beneficiaries. The
Enabling Act specifically provides 50,000 acres of land for a hospital for
disabled miners. An additional grant of 50,000 acres of 1 ants has made on
February 20, 1929. The same year, the Arizona Legislature passed a b i l l
calling for the establishnient of a hospital for disabled miners to be
built adjacent to APH. The Miners' Hospital Endowment Fund presently has
an expendable bzlance of more than $ 1.2 mill ion and a nonexpendable
balance of nearly $ 842,000.* In fiscal years 1983- 84 and 1384- 85, the
* The idiners' tlospital Endowment Fund consists of three separate
accounts, two of which are nonexpendable, i . e., not available for
agency use, and are maintained solely by the State Treasurer. The
Treasurer invests the mney in the nonexpendable accounts and deposits
earnings from these investments to the tlospi t a l f o r Disabled Miners '
expendable account.
2 5
expendable earnings of $ 514,679, and deposits of
541,463 to the nonexpendabl e account.*
; tab1 ishing a disabl ec! miners' hospital , Arizona has a l l owed
t requirements to be admitted to APH. T h i s appears to be i n
the terms sf the trust agreement set forth i n the Enablina
) H does not provide many services commonly thought to be
- - l a hospital. The courts have generally held that, a t a
m i n i m u m , a hospital provides surgical care. APE i s not licensed or
certified as either a nursing home or a hospital, and does not have
f a c i l i t i e s to provide surgical care for its residents.
Over the years, miners have comprised only a small portion of the APH
resident population. For exi; ii? ple, i n the l a s t ten years no more than ten
miners have 1 ived a t APH in any one year. Presently, of the 158 residents
a t APH on1 y five are miners. Such 1 ow numbers may partly be the resul t of
Arizona statutes which estahl i sh r e s t r i c t i v e admissions qua1 i fications,
particularly for residency, age and employment requirements.** The
Enabling Act does not establisii any entry requirenents.
* Pliners ' Hospital Endokment Fund iracome incl cdes incnies received frem
earnings of trust lands, interest on invested noney, and
reimbursements from resident insurance policy payments for covered
medical expenses. For fisczl years 19l3-@ 4 and 1981- 85, averace
earnings were: from medical reimbursements, $ 77,? 00; from trust
lands, $ 31 9,217; and from invested money, $ 159,053
** Arizona Revised Statutes ( 1,. R. S. ) f 41-? A? estahl ishes qua1 ifications
for admission to the Hospital for Cisabled 17iners. A person i s
eligible who: ( 1 ) has followed the occupation of rining for 20 years
i n the State; ( 2 ) i s a citizen of the United States and the State of
Arizona; ( 3) has been a resident of Arizo~ a for a t 1 east 35 years; and
( 4) i s 60 years of age or older and i s ~ ~ n s h lteo support himself, or
has suffered incapacitating injuries frcn snd i n the course of
mining. The Arizona Le9is1 ative Council issued an opinion which said
that since the Enabling Act does not specify any intent by Congress
regaraing admissions requirements for the hospital, i t is apparently
l e f t up to the State to decide. Based on this reasonin?, the opinion
stated that A. R. S. 541- 942 appears to be valid.
State May Be Liable For Inappropriate Use Of
lunds And N O ~ C O M Di~ a nce With tnabl ina Act
The State of Arizona may be liable for inappropriate use of the Miners'
Hospital Endowment Fund because it has not complied with the terms of the
Enabl ing Act. APH has continuously used the Miners' Hospital Endowment
Fund inappropriately. Based on a miners' hospital case in the State of
New Mexico, the courts may find Arizona in violation of the trust and
order the State to comply with the intent of the Enahling Act. The
State ' s a1 ternatives to resolving this problem are somewhat 1 i m i ted.
APH uses Miners' Endowment Fund - Although APH does not provide many
hospital services, i t has continuously used the Miners' Hospital Endowment
Fund to support i t s operations. Over the years the Leaislature has
appropriated and APH has expended money from the Miners' Hospital
Endowment Fund t o meet operational expenses. The F~! nd has been used
consistently since at least 1941. APH currently uses the Fund to pay for
medical expenses incurred by residents a t the institution, regard1 ess of
\ vt? ether or not they are miners. The Fund i s also used for personnel
expenses not funded in the general appropriation that APH receives each
year. Furthernore, since July 1972 approximately 95 percent of the
expenditures from this Fund may have been used for purposes other than for
the care of miners. In the 1 ast 14 years alone, APH has expended more
than $ 3 nil 1 ion from the Fiiiners ' Hospital Endowment Fund. * Expenditures
from the Fund over that period ranged from $ 130,679 to $ 394,600 and
averaged approximately $ 220,740 per year. For fiscal years 1983- 84
through 1985- 86, money spent frcm the Miners Hospital Endovment Fund
accounted for about 8 percent of APH's total expenditures.
* Minersi Hospital Endowment Fund expenditure records co~ rld be traced
back only to 1941. Between 1941 and 1971 ( 1942 excluded because
records were n o t avail able), more than $ 1.9 r i l l ion was expended from
the Endovment Fund. Records showing the number of miner residents a t
APH were avail able only frcm 1972.
A court ruling on a case in b! ew F: exico sucgests that !, PH's use of the
Miners' Hospital Endowment Fund contradicts the terns of the trust
established in the Enabling Act. The New Mexico case i s especially
pertinent because Arizona and Ne\ g Mexico Enabl ins P. ct provisions
concerning a hospital for di sabl ed miners are i dentical .
New Mexico found 1 iable - The State of New Mexico was found in violation
of the trust established t o provide a hospital for disabled miners. The
New Mexico miners' hospital was opened for operation in 1905. In 1971 the
State allowed the miners' hospital accreditation to lapse and closed the
acute care portion of the hospital . Subsequently, the United States
government and a croup of disabled miners in New Mexico broucilt suit
against the State. They claimed that the State's miners were not
receiving the care intended by the terms of the trust agreement set forth
in the Mew r4exico Enablinc Act. The State contended that i t :.! as
fulfilling the terms of the trust by providing hospital care for miners a t
other state and private institutions. The State paid miners' medical
bills at these other institutions using Niners' Hospital Endowment Funcs.
The Federal District Court found E! ew Mexico guilty of a breach of trust in
i t s handling of the miners' hospital. The Court ruled that since the
purpose of trust provisions contained in the Enabling Act k; as t o establish
and maintain a miners' hospital, the State could not expend trcst monies
at other hospital s, even though the money was beins used t o provi Ce heal th
care to miners. The court further ruled that trust mcnies could only be
used for the facility the State operated as a miners' hospital. As a
result, the State of New Flexico was founu cuil ty of a breach of trust i n
i t s handling of the miners' hospital. The court orc'ered the State to
restore money inapprcpriztely spent, r ~ tih interest, t o the iliners '
Hospital Endowment Fund, and to construct a licensea and certified ceneral
hospital. The Tenth Circuit Court of Appeals affirred the District
Court's decision.*
* Officials in /! ew Flexico indiccted that because of the court rulinc
they were required t o pay approximately $ 1.9 million tc the Miners'
Hospital Trust Fund. In addition, they estimated that nearly $ 3
million was expended from the ! diners1 Hospital Trust Fund t o restore
the miners ' hospi t a I t . 0 a 1 icensed and certified general hospital for
the care of miners.
Courts may find Arizona l i s b l e - The courts may similarly find Arizona
liable for inappropriate use of funds and order the State to comply w i t h
the intent of the enabling act. Like Flew Mexico, Arizona has been using
its Disabled Fliners' fiospital Endowment Fund in an i n s t i t u t i o n other than
a miners' hospital, and for the care of non- miners. Therefore, based on
the Kew Mexico ruling, the State of Arizona may likewise be found i n
violation of the terms of the trust. This conclusion is further supported
by an Arizoca Legislative Council opinion, which follows.
The use of the Miners' Hospital Endowment Fund for any
purpose other than the care of disabled miners i n a
miners ' hospital is inappropriate. A separate
certified hospital for disabled miners shoul d be
establ ished in Arizona i n accol- dance with the Enabl ing
Act.
The State continues to increase potential 1 i a b i l i t y from continuecl use of
the Disabled Miners' Hospital Endobment Fund and the nonexistence of a
hospital for disabled miners. The courts may, as they did i n New Mexico,
find all or part of the expenditures from this Fund to be inappropriate
and crder the State to reivburse, with i n t e r e s t , monies spent from the
Fund. In addition, the courts may require that Arizona comply w i t h the
intent c f the Enabling Act and establish a 1 icensed and certified general
hospital for disabled miners.
S t a t e ' s a1 ternatives limited - The a1 ternatives available to the State to
resolve this problem are scnewhat f i ~ i t e d . Lesislative Council s t a f f
indicated that three a1 t ~ r n a t i v e se xist.
e The State coul ti build a miners' hospital as required by the
Enabling Act. This cption nay cot Se e n t i r e l y f e a s i b l e , hoviever,
since the number of people that nay be el i g i b l e f o r care in such
an insti tction i s c~ lrrently ~~ nknown. Ft? rthermore, the State may
n o t feel that the expense is warranted.
Q The State cclilo' : lait r n t i l the patter regardin? a disabled
nincrs' hospital i s contested i n court. There i s some discussion
as t o !: herher the cccrts that have jurisdiction over Frizcna
~ ; : i ~ hrut l e differently than the Cistrict Court for the District
of ;' el; !?? xico d i d in t h ~ ct a se. This a1 ternative could also be
very time- consurninq, tzking several years before any resolution
i s achieved. Fcr s r ~ ~ p l etk, e tlew I'iexico cese tool: approxi~ ately
ten years t o resol ve.
s The State, through i t s congressional representatives, coul d
petition Congress for a chance in the Enabling Act. Legislative
Council staff indicated that this may prove to be a very
time- consuming and di fficul t process. However, i f the State
wishes to use the Miners' tiospital Endowent F~ rncl, i t may be the
only feasibl e sol ution . The preceding a1 ternatives require
Arizona to either construct a hospitzl which may nct be justified
by past or current use or refrain From using available funds
during a long and uncertain legal process.
Regardless of which alternative the State elects to pursue, the
Legislative Council Opinion points o u t that current and continued use of
the Hiners ' Hospital Endowment Fund remains inappropriate unti 1 a hospital
for disabled miners exists.
CONCLUSION
APH has inappropriately expended Roney from the Miners' Hospital Endcment
Fund. Although a hospital for disabled miners i s re~ uirec' by Arizona
statutes, one has never existed. Funds earmarked for a hospital have
instead been used by APH. As a result, the State of Arizona may be 1 iabl e
for use of funcs in violaticn of the ccnditio~ s of the trust and be in
nonco~ pila nce with the Enabl i ng Act.
1 . The Arizona Legisl zturc should discontinue appropriati np, and APE
should discontiriue csing, any noney from the Disabled ! liners1 iiospital
Enco~: nxent F c ~ a .
2. The State shculc' petition the llnitec' States Ccrigress tc amend the
Arizcca Enabl ing Act t o allci; the i: inersl ticspital Endcr~ ment Fund to
be used for ctkter purposes.
FINDING I11
THE ARIZONA PIONEERS' HOME NEEDS TO IMPROVE
ITS PAYNENT FOR CARE DETERMINATIONS
The Arizona Pioneers' Home ( APH) needs to improve i t s process for
determining resident payments for care. Current APH pol icies and
procedures do not conform w i t h 1 egis1 ative intent. APH shoul d strengthen
i t s payment for care policies and process.
APH Does Not Adhere To State
Law In Determining Residents'
Abilitv To Pav t- or Care
The Arizona Pioneers' Home does not comply w i t h legislative intent i n
determining resident payments for care. State law requires that residents
pay based on their financial ability. However, APH payment for care
determinations are not always based on residents ' full financial abil i ty
and may result in inconsistent treatment of some residents.
Law requires payment based on ability - Arizona Revised Statutes ( A. R. S.)
S41- 923 requires that people admitted to APH pay monthly fees for costs
incurred by the State for their care based on t h e i r a b i l i t y . The
requirement became law i n 1970. Requiring payment for care was a major
change in APH policy and applies to all people entering the home since
August 11, 1970.
A1 though the statutes do not define what constitutes a person's a b i l i t y to
pay, other public long- term care programs consider all net assets and net
income i n determining an appl icant's financial abil ity to pay. Because
the majority of the Home's residents are from Yavapai and Maricopa
Counties, we reviewed the long- term care programs of these counties. They
include all assets as well as income i n determining applicants' a b i l i t y to
pay for their orin long- term health care. If an applicant's t o t a l assets
or income exceed a specified amount, the county considers the applicant
able to pay for his own lona- term care, and thus will not provide
financial assistance.* In addition, both A1 aska and Wyoming pioneer homes
consider t o t a l assets and income in determining whether an applicant
should pay less than the maximum monthly fees. Only residents whose
income and assets are below specified amounts pay less than the full cost
of their care.**
APH does not include a l l assets i n determining a b i l i t y to pay - APH staff
generally exclude some assets i n determining a b i l i t y to pay. A1 though
written policy requires the Home to include all assets i n calculating a
resident's a b i l i t y t o pay, s t a f f generally exclude c e r t a i n a s s e t s that do
not produce income. Often excl uded nonincome- producing assets incl ude
real property and personal property such as automobiles. APH staff feel
that residents should not pay for care base+ on assets that produce no
actual income. Including nonincome- producing assets would require some
residents to use their liquid assets to pay for care, resul tins i n smaller
estates. However, because APH does not include these assets i n the
calculation, costs of supporting some residents unnecessarily s h i f t s to
State taxpayers. Accordinq to the Attorney General's s t a f f , all assets
should be included i n determining payment for care amounts. The potential
resident must then determine how to pay the amount.
Including all assets as required by APH policy would increase some payment
for care amounts. As prescribed by pol icy, applying an annuity factor to
A Yavapai County 1 imits assets to $ 30,000 ($ 5,000 may be cash) and
yearly income to $ 3,420. Garicopa County allows $ 9, P55 of income
yearly and up to $ 35,600 i n assets. Individual a s s e t s a r e 1 imited
to: home, $ 30,000; cash, $ 1,600; vehicle, $ 1,500; and 1 i f e insurance
cash value, $ 2,500.
** Further~ ore, the two states routinely f i l e claims on prior
residents' e s t a t e s f o r unpaid amounts. These unpaid or past due
amounts are the cumulative amounts rtot paid by a resident when the
resident did not pay either the determined payment for care amount
or the monthly maximum cost of care.
nonincome- producing assets woul d, i n some cases, i ncrease monthly
assessments.* In nine of the 18 resident recent admission f i l e s we
reviewed, incl uding such assets woul d have increased the residents '
individual monthly payment for care amounts between $ 12 and $ 573, for a
total of $ 2,269. Most of the payment increases resul ted from incl uding
residents' homes in the calculation.
In some cases, APtl staff have included these assets in determining
resident payments. However, inconsistent pol icy appl ication has resul ted
in inequitable payments among residents. For example, five of the 18
recently admitted resident files we reviewed listed a home as an asset on
the financial statement. In all b u t one case, payment for care amcunts
did not include an assessment on the home, based on the idea that the
residents should n o t or could not pay the additional assessed income on
their homes until they were sold or rented. In one case, however, the
resident's payment did incl ude such an assessment, increasing her monthly
payment by $ 449. The resident had $ 57,520 in liquid assets which enabled
her to pay the amount. Mokiever, two other ho~ eowners who had liquid
assets of $ 36,800 and $ 64,500 were not assessed for their homes.
APH Heeds To Strengthen Its
70 l i ci es And Adhere To Them
The Arizona Pioneers' Home needs to strengthen i t s payment for care
policies and improve adherence t o them. The Home lacks policies regarding
asset disposition prior to and during residency at APH. In addition, APH
does not verify resident financial information.
APH lacks policy over asset disposition - Policies do n o t address assets
disposed of prior to and during residency at APH. lihen a potential
* APH uses 1 ife insurance annuity factors to determine incope on
nonincorne- producing assets. This method assumes that the value of
nonincome assets remainin9 after allowances of $ 2,000 for burial and
$ 2,000 for personal property have been deducted are handled as if
converted t o cash and invested in a 1 ife annuity, thereby providin~
the resident a monthly income.
resident gives away or sells an asset a t unrealistically lord amounts, this
results in a lower payment for care. According to the Attorney General ' s
staff, assets sold or disposed of a t less than 75 to 80 percent of fair
d
market value should s t i l l be included as an asset i n determinina payment
for care. Our review of some resident files sho\.~ s that the lack of a
policy addressing this has, in fact, resulted in lost payment for care
revenues to APH.
Two recent examples i l l ustrate our concerns.
One resident's initial financial statement included a home and
other assets valued a t $ 72,400. Based on the reported values,
APH could have added $ 582 to the payvent for care amount.
Including this amount and other income listed on the financial
statement would have increased her monthly payments from $ 224 t o
$ 987. However, a t the time of her entrance into APH
approximate1 y one year after applying, the resident excl uded the
hone from an updated financial statement. The resident did not
report any increase in other assets or income based on selling or
renting the home.
e illore recently, another resident gave $ 20,000 of savings to a
relative, which reduced her monthly payments by $ 177.
Other states' pioneer homes have developed policies t o address this
probl en. In A1 aska, pol icy reads as fol lous.
. . . In determining assets . . . [ the Department] will
include the value of any assets or interest owned by
the applicant within 21 months preceding the date of
application i f the applicant save away the asset or
interest, or sold cr assigned the asset or interest at
less than fair market value. . . . This standard also
applies in determinincj continued residency [ at the
facility.]
biyorning also includes assets disposed of within 24 months prior tc
application in determining a resident's monthly care fee. In addition,
both Ihricopa and Yzvapai Counties ' 1 cnc- term care programs consider
assets disposed of three years prior t o application in deternining
el i cjibil i ty. The APH Superintendent agrees that controls are needed in
this area.
Financial information not verified - Unlike other public long- term care
programs, APH does not verify financial information. Although Arizona
Revised Statutes ( A. R. S. ) $ 41- 323. C require verification, APH staff do not
attempt to verify the accuracy of financial information reported by
potential residents. Rather, APH staff rely on the applicants'
statements. Payments for care calculated using unverified financial
information nay result in incomplete or incorrect assessments.
The practice of verifying financial information i s widely accepted i n
other public long- term care programs. Pioneer home staff in Alaska and
Wyoming verify financial information of residents who pay less than the
full cost of care. In addition, long- term care programs in Maricopa and
Yavapai Counties require appl icants to provide specific documentation of
financial data reported on appl ications. For example, confirmation
letters from pension organizations, banks and insurance agencies stating
pension mounts, savings and checking accounts and amounts, and the cash
value of insurance policies are necessary. An appl icant must a1 so obtain
property val ue statements from the County Assessor Is Office.
COMCLUS ION
APH needs to more accurately determine resident payments for care.
Current Apt4 pol icies and procedures do not conform wi tt! leaislative
intent. To comply, the Pioneers' Home st\ ould strengthen and adhere to i t s
payment for care policies and process.
1. The Pioneers' Home should revise i t ' s current policy to clearly define
the assets to be included in payment for care determinations. Cnce
developed, APH staff should adhere to this policy.
2. APH should comply with A. R. S. $ 41- 923 by developing anc! following
procedures for verifying appl icant financial infor~ ation.
3. APH should establish a policy of including in payment for care
determinations the fair market value of assets disposed of within a
specified period of tine prior t o admission or during residercy a t APH.
OTHER PERTIf4ENT INFORMATION
During our audit, we developed other information pertinent to the personal
allowance deduction used in determining resident payment for care amounts.
Arizona Pioneers1 Home ( APH) policy allows residents to keep $ 140* of
their monthly income for personal expenses. In cal cul ating payment for
care, APH staff deduct this amount from a r e s i d e n t ' s t o t a l available
income. Residents spend this allowance as they choose, generally for
items 1 ike t o i l e t r i e s , clothing and hair care.
In comparison to other long- term care programs, APH1s deduction may be
high. Both the Yavapai and Maricopa County long- term care assistance
program allowances are $ 50.40 a month, based on current Federal Social
Security amounts. In addition, both Alaska and Wyoming pioneer home
allowances are less than that of APH: biyoming residents keep $ 65 of the
f i r s t $ 75 of monthly income and 15 percent of income above $ 75. Alaska
provides a $ 100 personal allowance for i t s pioneer home residents.
The Eome c o ~ ~ lidnc rease payment for care receipts, and thus General Fund
revenues, by reducing the personal a1 1 owance deduction. For example, i f
APH reduced i t s allowance to $ 100, payment for care receipts would
increase by approximate1 y $ 71 ,000 a year .** Thi s amount woul d increase
payment for care receipts to the General Fund by 13 percent. This amount
i s equal to approximately 2.5 percent of APH operating expenditures during
fiscal year 1986.
- 0 allowance was f i r s t established and l a t e r increased to $ 135 by
the Department of Health Services ( DHS) while APH was under DHS during
the mid- 1970s. The current $ 140 amount was establ ished i n the late
1970s.
** Auditor General s t a f f calculated this amount by multiplying the
estimated average resident population by the increase of $ 40 a month
for a one- year period. This estimate excludes miners and residents
w i t h no income.
AREA FOR FURTHER AUDIT WORK
Should the Pioneer's Home Seek AHCCCS Reimbursement for Pesident Medical
Care?
The Arizona Pioneers' Home does n o t receive reimbursement from the Arizona
Health Care Cost Containment System ( AHCCCS) for mec'ical care provided t o
residents. b; hen AHCCCS was instituted, APH sent a test case t o assess the
resident's AHCCCS el igibil ity . According t o an APH administrator, AHCCCS
determined that APH residents were not eligible because they were already
receiving a State subsidy. AHCCCS staff recently indicated that this
informal pol icy s t i l l appl ies. Further~ ore, determining el igibil i ty of
current residents waul d be di fficul t because of unverified financial
information and unavailable medical expense records. Further audit work
i s needed to determine whether the informal policy is appropriate, how
many residents may qua1 ify for P. HCCCS, what procedures APH wo~ ldl need to
develop to obtain payment and the cost- benefit of seekino AHCCCS
rei~ bursernent.
preerott, prironn 85301
November 20, 1986
Douglas R. Norton
Auditor General
Office of the Auditor General
2700 N. Central Avenue, Suite 700
Phoenix, Arizona 85004
Dear Mr. Norton:
Enclosed is our response to the Revised Draft
Report of the Performance Audit of the Arizona
Pioneers' Home conducted by your department.
I sincerely appreciate the cooperation from
your staff, should you or they have any questions
on the response please do not hesitate to contact
me.
Sincerely,
" r, I - 7 / LL Y A i f i ~ c - , ~
~ e$ le L. Farmer
Superintendent
IJLF : j f
Enclosure
Reponse
to the Performance Audit of the
Arizona Pioneers' Home
Conducted by the Office of the Auditor General
We are in agreement with the basic idea in each of the three
findings of the study:
( 1) The concept of the Arizona Pioneers' Home should be
reviewed by the Legislature. However, there are several
reasons why we feel there is justification to continue
the Home.
( 2) Proper use of the Disabled Miners' Hospital Endowment Fund
needs to be clarified. Congressional change of the
Enabling Act is the best approach so that we may come into
compliance with requirements.
( 3) There is need to improve payment for care determinations
and disposition of assets by applicants and residents.
We are in the process of proposing Rules to establish
these guidelines.
FINDING I: The Need for the Pioneers' Home Is Changing
The definition of a pioneer used in the report is that
used by the Arizona Historical Society, which restricts a
pioneer to an individual who arrived in the State before 1912.
The original statute establishing the Pioneers' Home required
an applicant to " have been active in the development of Arizona."
Although this wording was dropped in 1970, original legislative
intent does not indicate that contributions to the development
of Arizona will likely cease at a particular date and did not
anticipate the need for arranging to close the Home after a
certain generation had expired.
When the town of Prescott welcomed the building of the
Pioneers' Home in 1910 and its citizens donated the land upon
which it was to be built, no one foresaw a day when any use
other than this would be made of the land or the building other
than as a real home for citizens of Arizona ii~ their sunset years,
In fact, the deed for the land upon which the Pioneers' Home
standscontainsa restriction that it is " to be used by the said
Territory as a location upon which to construct a Xome for the
Pioneers of said ~ erritory, and for no other purpose." If
they had known that some other use for it would eventually
develop, they might have reconsidered their generosity. If the
Home were to be discontinued, a similar change in the Enabling
Act would have to be made as that anticipated for the Disabled
Pliners' Hospital since lands and funds were set aside in the
Enabling Act for the establishment and operation of the
Pioneers' Home.
It is true that there are always more residents in the
Home from Yavapai County than from any other one county, as
would be true no matter what its location. People who grow
up being more familiar with its presence are naturally more
likely to think of applying for entrance in later years.
However, if one considers the county of residence to which
the individual came when he or she originally entered Arizona,
and in which he is more likely to have spent his productive
years, the distribution of the present population at the
Pioneers' Home shows a different result to that showing only
the county in which the resident lived at time of retirement
just prior to entering the Home. As Figure 1 indicates, r)
Yavapai then has 35% of the residents, Maricopa 328, 6% each
for Coconino and for Gila, 5% for Pima, and 16% for the
remaining counties. Also, considering overall need, if the
population of elderly within each county is compared to the
county's total population, it is found that one of every 4.4
individuals ( 22.5%) of Yavapai's population consists of
individuals 65 years or older; one of every 8.2 ( 12.2%) of
Maricopa's total population; one of every 7.6 ( 13.1%) of
Pima's total population; one of every 19.2 ( 5.2%) of Coconino's
total population; and one of every 8.4 ( 11.9%) of the remaining
counties' total population.
Pima
Coconino Gila 5 &
6 % 6 8
Residence at Time of Entrance to Arizona
FIGURE I
Information regarding the Pioneers' Home is equally
available to all counties and to all legislators, but if desired
an advertising method to keep the availability of the Home
before all residents of the State could be devised. There is
always a fairly lengthy waiting list of applicants, and this
would also have to be included in the advertising since the
waiting list could conceiveably grow still longer. If care-fully
monitored, a priority list by county according to elderly
population distribution could be developed for processing the
waiting list. Direction to do this should come from the
Legislature.
Yavapai County and especailly the Prescott area would
naturally feel the closing of the Home very deeply. Approxi-mately
300 people would be affected if the 136 individuals
employed there were to be dismissed and enter the job market in an
area in which jobs are almost non- existent. Their support of
the local economy affects an additional circle of businesses
and people. The Home itself does the major part of its pur-chasing
through other than local sources, however, due to
State Purchasing contracts, but the 153 residents and their
families would be most directly affected. As the report indi-cates,
their release would certainly over- tax the resources of
Yavapai County to support, even if all were returned to the
counties from which they entered. The State has a definite
commitment to the current residents, as the report also states,
since they entered with the understanding that they had a " home
for life." At the request of the auditors, we developed a
break- down of our expenses per day for a resident in personal
care and for a resident in skilled care. These compared favor-ably
with similar charges in private facilities ($ 39.35 in
personal care and $ 58.18 in skilled care), although our costs
also included those for doctors and drugs which were additional
expenses to the individual at private facilities.* Using these
figures, plus our average loss per year of 25 residents by
death, it is easy to see that there would likely be a substan-tial
financial obligation for at least another six or seven
years for this current population. Arrangements would also
have to be made to care properly for the miners now here
during the years involved to get the nabl ling Act changed as
suggested for the Miners' Xospital.
* If only the money appropriated from the General Fund, less
the money returned to it from Payment for Care, divided by the
number of residents, the cost to the State per resident per
month averages $ 965.00.
The Pioneers' Home is not required by statute to be
licensed but is required to be surveyed every six months by
the Department of Health Services and a response to any
deficiences noted sent to the Health Department, the Governor,
and the Legislature with plans to correct the deficiencies.
These surveys consistently praise the Home and its staff for a
their care of the residents and their compliance with regula-tions.
As with any older structure, comparison with require-ments
for new construction puts the older structure in a very
bad light. However, not all old structures are abandoned
because of this. Constant maintenance and renewal projects are
underway at the Home for its safety, sanitation, and comfort. 0
During this current year the oldest portions of the brick walls
have had the mortar repointed, and the fire ramps have been
widened to facilitate residents' exiting of the structure during
an emergency. The example of the bathrooms not all having
mechanical ventilation ( as required in new structures) fails
to mention that all which lack mechanical ventilation have an a
outside window.
A long- range plan for renewal and maintenance of the
building is under way with the State's new building renewal pro-gram.
If the Department of Health Services wishes the Pioneers'
Home to establish an additional program to meet any specific a
standards they set, we will be glad to comply with all reasonable
and possible requests. The environment of the Pioneers' Home
has always been more " homey" than " sterile" and has seemed in
this regard to be more comfortable for those seeking residency
here. All standards of safety and sanitation must most assuredly
be met, but kind and loving care by the best trained personnel a
will continue to receive the greatest emphasis. There are
numerous instances in which the doctor treating a resident at
the hospital has released the resident to return " Rome" so he
or she could receive the best care available instead of remaining
in the hospital for the usual period of recuperation. The
Pioneers' Xome was not established as a nursing home but as a •
retirement home for the pioneers. It is true that an abundance
of applications for admission are from individuals who really
require a nursing home at that time. Acceptance of these
individuals at this stage of decline would swiftly turn the
Pioneers' Home into a nursinghorne, but careful regulation of
entrance requirements will prevent this so that the 64 bed
skilled care infirmary willaccom~ odatethose residents who have
been relatively independent upon entering but eventually develop
the need for skilled nursing care.
FINDING 11: The Arizona Pioneers' Home Inappropriately Expended
Money from the Miners' Hospital Endownment Fund
It has long been a known fact that Arizona did not construct
a separate hospital facility for miners as directed in the
statutes in 1929, although as the report explains, the miners
have been cared for in every way in the Arizona Pioneers' Home
except for actual hospital ( usually surgical) procedures, at
which time their care was provided and paid for at the Yavapai
Regional Xedical Center. Since an actual hospital was never
built, the results of the New Mexico court decision have placed
a somber light on the Arizona situation. There are, however,
a few notable differences between the two cases.
In New Mexico a hospital for miners w- as constructed but
was later discontinued, whereas in Arizona there has never been
a change in how the miners have been cared for since the first
legislation concerning them. When the hospital in New Mexico
lost its surglcal status, it was dropped to a facility pro-viding
only intermediate care, not skilled care as APH prcvides.
The funds provided in the Enabling Act to establish the hospital
and care for the miners were combined with other New 1v: exico
State health care funds, and money for the care of miners then
was taken from this general fund. The Enabling Act give
specific instructions to both States that the miners' money
is to be kept in a separate fund. In Arizona the funds provided
for the care of miners has always been kept as a separate endow-ment
fund, and expenditures from this fund can therefore be more
easily traced and accounted for.
As apparently was the case in New Mexico, there have been
relatively few miners to apply for residency over the years.
If the Enabling Act had been complied with " to the letter,"
it is interesting to speculate on the amount that would have been
expended to have built a " complete" surgical hospital and to have
staffed it for full services from 1929 until the present, regard-less
of how few were served by it. There has never been a guide-line
to follow for specific expenditures from the : liners1
Hospital Endowment Fund, and each Superintendent has tended to
follow the tradition of what was done in the past.*
In recent years, this has meant that all medical expenses
for either miners or pioneers were taken from the fund, as well
as any expenses for personal services or employee related
expenses which exceeded the funds appropriated from the General
Fund. A11 remaining expenses for the care of the miners was
taken from the Pioneers' Home Endowment Fund.
* All expenditures from this fund, however, have been appro-priated
by the Legislature by a footnote in the Appropriations
Bill.
At present we are attempting to develop a cost allocation
per miner to be applied to each miner's care at the Pioneers1
Home and to use this as a rationale for total expenditures from
the 14iners1 Hospital Endowment Fund. If no funds at all are
to be spent from this fund, it will be necessary to request
that additional funds be appropriated from the General Fund by a
the Legislature for the operation of the Pioneers1 Xome for the
miners and the other residents.
FINDING 111: The Arizona Pioneers' Home Needs to Improve Its
Payment For Care Determinations @
From the beginning of the Pioneers1 Home in 1911 until 1970
no resident paid for his care at the Hone. There was no indi-cation,
either, that the Home was established for the indigent
but more as a retirement home where the pioneers could enter
with dignity. In 1970 the Statutes were changed to require
that each resident pay " according to his ability to pay." The
details to implement this have never been addressed formally
or the extent of authority determined. Rule making authority
is not directly delegated in the Statutes and, therefore, has
never been pursued. Recent advice from the Attorney General,
however, is that the Arizona Pioneers' Home does have implied 0
authority to propose and adopt Rules. Therefore, the staff
of the Home is currently in the process of constructing Rules
which we believe will assure consistency and fairness as they
define procedures in each area.
These proposed Rules will attempt to define clearly the
assets to be included in payment for care determinations and
the method of assessing them; the disposition of assets by
residents prior to admission and during residency at APH; and
procedures for verifying applicant financial information. As
soon as possible, these Rules will be proposed and, hopefully,
adopted so they can be rnade a part of the routine admissions
procedure. If all the financial information provided by each
applicant and each resident is to be thoroughly verified, it
appears that additonal staff will be required to accomplish
this.
M E M O
July 15, 1986
TO: Douglas R. Norton, Auditor General
FROM: Arizona Legislative Council
RE: Request for Research and Statutory Intrepretation ( 0- 86- 5)
This memo is sent in response to a request made on your behalf by William
Thomson in a memo dated July 3, 1986.
FIRST FACT SITUATION:
Arizona Revised Statutes, ( A. R. S.) section 41- 941, subsection A provides that:
There shall be a state hospital for disabled miners adjacent to the
~ r i z o n api oneers' home at Prescott which shall be managed by the governor.
The State of Arizona Enabling Act ( Act June 20, 1910, c. 310, 36 U. S. Stat. 557, 568- 579,
( section 25) provides for lands to be held in trust " for miners' hospitals for disabled miners,
I, fifty thousand acres. . . . I' An additional grant of fifty thousand acres was made by Act
February 20, 1923, c. 280, section 2, 45 U. S. Stat. 1252 for the same purpose.
Section 28 of the Enabling Act states that lands granted by the United States to
t h e S t a t e of Arizona are held in trust and are " to be disposed of in whole in or in part on1
in manner as herein provided and for the several objects specified". ( Emphasis added
Furthermore, this section states that disposition of any of these lands, or of any money or
thing of value derived therefrom, for any object other than for that which has been
provided is considered to be a breach of trust.
Arizona has never established a miners' hospital. Miners have been and continue to
be admitted t o t h e Pioneers1 Home instead. The Pioneers' Home is not licensed or
certified as a nursing home nor is it licensed or certified as a hospital. Monies from the
Miners' Hospital Endowment Fund have been expended for t h e c a r e of all residents at the
Pioneers' Home, The fund is presently used for all medical expenses incurred by residents
of the Home, as well as for personal services and Employee Related Expenses ( ERE) not
otherwise provided for in the general state appropriation.
In rhe past the fund was primarily used for personal services and ERE; however, it
was also used for capital improvement projects and other operating expenses. The Home
currently has one hundred fifty- three residents, six of whom are miners.
Arizona's Enabling Act is similar to the Enabling Act for the State of New Mexico
which also provides " for miners' hospitals for disabled miners, fifty thousand acres. . . " of
trust land. An additional granr of fifty thousand acres of land was also made. In 1971 the
( United States of America sued the State of New Mexico over its Hospiral for Disabled
Miners. The United States District Court for the District of New Mexico ruled that the
( State had inappropriately used monies from its Disabled Miners Endowment Fund and
ordered that the fund be restored. Memorandum Opinion No. 9484 Civil, 1974. In
addition, in a ruling on a motion for clarification of judgment, the Court ruled that New
Mexico had to establish a certified hospital ward for the care of miners in the Miners'
Hospital.
QUESTIONS PRESENTED:
1. Is the use of the Miners' Hospital Endowment Fund, as described in the f a c t ( I
situation, inappropriate?
2. Based upon the Enabling Act and the Court's reading of the intent of that Act as
evidenced in the New Mexico case, should there be a certified hospital facility for
disabled miners in Arizona?
ANSWERS:
1. Yes.
2. Yes.
DISCUSSION:
In addition t o t h e limitations on the use of monies derived from the land grant as
stated in the fact situation, section 28 of the Enabling Act also provides that:
A separate fund shall be established for each of the several objects
for which the said grants are hereby made or confirmed, and whenever any
monies shall be in any manner derived from any of said land the same shall
be deposited by the state treasurer in the fund corresponding to the grant
under which the particular land producing such moneys was by this Act
conveyed or confirmed. No money shall ever be taken from one fund for
deposit in any other, or for any object other than t h a t f o r which the land
producing the same was granted or confirmed. ( Emphasis added.)
The language of the Enabling A a is clear and direct in restricting use of the trust
fund to the Uiners' Hospital. Monies derived from the land trust that have been and are
currently used for the Pioneers' Home and its residents appear to be inappropriate
expenditures in violation of the trust. This interpretation of the Enabling Act is supported
by the judgment in the New Mexico case, affirmed on June 22, 1976 by the Tenth Circuit
Court of Appeals in United States v. State of New Mexico, 536 F. 2d 1324, in which the
Court stated:
Since the purpose of the trust was to establish and to maintain a
" miners' hospital," the provisions requiring that the trust funds only be
expended for the trust purpose are to be literally construed. This literal
conseuction means that trust funds cannot be spent at other hospitals even
though such money is being used to provide health care for miners.
The Enabling Act is not as clear as to whether a certified hospital facility for ( disabled miners is required in Arizona. The Act does set aside land whose proceeds a r e t o
be used for that purpose. Neither the Act nor the Arizona Constitution, however, requires
specifically that a miners' hospital be established. The State Hospital for Disabled Miners
was established by the Legislature in 1929 " to be built adjacent to the Pioneers1 Home" at
the time of the second land grant by Congress for the hospital, but that was nineteen
years after the Enabling Act.
Despite this apparent lack of a mandate to actually establish a facility, the
District Court in the New Mexico opinion cited above ( based on identical language in the
Enabling Act of that State) found that "/ 7he plain meaning of the words requires the
establishment and maintenance of a separate hospital facility for the benefit of resident
miners of the state." Furthermore, the Court held that such a facility must be a
certified, fully accredited general hospital providing surgical care.
Absent any other law or opinion on this issue, this case ( affirmed by the Tenth
Circuit Court of Appeals) would lead to the conclusion that a certified hospital facility
should be established for disabled miners in Arizona. It should be noted, however, that a
court challenge on this issue in Arizona would be appealed to the Ninth Circuit Court of
Appeals with potentially different results.
SECOND FACT SITUATION:
A. R. S. section 41- 942 establishes qualifications for admission to the Miners'
Hopsital which require that the person:
1. Has followed the occupation of mining for twenty years in the
state.
3. Has been a resident of the state for not less than thirty- five
years.
4. Has reached the age of sixty years or more, and is financially
unable to support himself, or has suffered incapacitating injuries arising
from and in the course of mining.
A. R. S. section 41- 923, subsection A establishes qualifications for admission
to the Arizona Pioneers' Home which require that the person:
1. Is and has been for a period of five years prior to his application
for admission, a citizen of the United States and of this state.
2. Has been a continuous resident of this state for not less than
thirty years.
QUESTIONS PRESENTED:
1. Does A. R. S. section 41- 942, paragraph 4 conforrn to the intent of the Enabling
Act of Arizona, which provides trust lands for a miners1 hospital for disabled miners, by ' C limiting admission to the hospital to miners over sixty years of age?
2. Does A. R. S. section 41- 942, paragraph 1 conform to the intent of the Enabling ( Act of Arizona by limiting admission to persons who have " followed the occupation of
mining for twenty years in the state"?
3. Are residency requirements set forth in admission qualifications for the Arizona
Pioneers1 Home ( A. R. S. section 41 - 923, subsection A, paragraphs 1 and 2) and the Hospital
for Disabled Miners ( A. R. S. section 41- 942, paragraph 3) constitutional?
ANSWERS:
See discussion.
DISCUSSION:
The Enabling Act providing trust land " for miners' hospitals for disabled miners"
does not appear to create any intent by Congress regarding admission requirements for
the hospitals other than disability. Apparently, the hospital admission criteria were left
to t h e S t a t e to decide. The Arizona Constitution and case law are also silent on this
issue. Arguably, disability could include age as well as physical incapacity. Therefore,
the answer to the first two questions of this fact situation is t h a t t h e admission criteria
established by the Legislature in A. R. S. section 31- 941 appear t o be valid absent other
legal restrictions.
As for the citizenship and residency requirements for admission t o t h e Home or
Hospital, severai United States Supreme Court decisions cast some doubt on their
H constitutionality.
( k Shapiro v. Thompson, 394 U. S. 618 ( 19691, involved a residency requirement and a
one- year waiting period for welfare assistance in Connecticut, Pennsylvania and the
District of Columbia. The Court observed that these requirements created two classes of
needy citizens which were indistinguishable except for the amount of time they had been
residents. When a s t a t e distributes benefits unequally, the courts examine the law under
the Equal Protection Clause of the Fourteenth Amendment to the United States
Constitution which provides that no s t a t e may deny any person the equal protection of the
laws. A law may be valid even if it distinguishes among residents, if it promotes a
( 1 compelling governmental interest". The Court in Shapiro concluded that a waiting period
for welfare assistance constituted discrimination and denied citizens equal protection of
the laws.
Similarly, in the case of Memorial Hospital v. Maricopa County, 415 U. S. 250
( 1974), an Arizona law requiring a year of residency for eligibility for county medical
assistance was invalidated by the Court as a violation of the Equal Protection Clause and
as impinging on the right of interstate travel by denying newcomers the right to basic
necessities of life.
Both Shapiro and Memorial Hospital, however, involved needy or indigent citizens'
rights. A distinction in the Arizona Pioneers' Home and Miners' H o s ~ i t a is ituation is that
admission is not limited to needy people but is limited to those who have resided in this
State for a long time.
( The United States Supreme Court has invalidated a law of Alaska that allowed a greater dividend from state oil income to be given to citizens who had lived in that State
a longer time. Zobel v. Williams, 457 U. S. 55 ( 1982). The Court ruled that providing
greater benefits to people based on length of residency was violative of the Equal
Protection Clause. This case is closer t o t h e situation regarding the Pioneers' Home and
Miners' Hospital because indigency is not a factor. However, a significant distinction in
all the Supreme Court cases to date from our fact situation is that neither the Pioneers1
Home nor the Miners Hospital is the only source for care in this State. Arizona citizens
have many care and hospital facilities to choose from. The complainants in the cases
above had no alternatives.
As questionable as the residency requirements for admission t o t h e Pioneers' Home
or Miners' Hospital may be under the foregoing decisions, it is impossible to second- guess
a court as to the constitutionality of our requirements under the unique facts as presented
in Arizona. Until a court . determines whether our residency requirements further a
legitimate state interest, the statutes must be complied with.
THIRD FACT SITUATION:
A. R. S. section 41- 923, subsection A, paragraph 4, which concerns admission
qualifications to the Arizona Pioneers' Home, provides that:
Because of adverse circumstances, failing health or other disability is
unable to provide himself with the necessities and ordinary comforts of life.
( Emphasis added.)
@ ( Presently a number of residents at the Home have the financial means and ability to
provide for themselves.
QUESTION PRESENTED:
Does A. R. S. section 41- 923, subsection A, paragraph 4 mean that persons
I) financially able to provide for themselves do not qualify for admittance to the Home?
ANSWER:
No.
DISCUSSION:
In determining legislative intent, it has been stated t h a t t h e meaning which
naturally attaches t o t h e words used and best harmonizes with the context should be
adopted. State v. Miller, 100 Ariz. 288? 413 P. 2d 757 ( 1966). The language used in this
paragraph requiring a resident of the Home to be " unable to provide himself with the
necessities and ordinary comforts of life" does not appear to be limited to being
financially unable to do so. If the Legislature had intended to restrict admission to the
Home to indigents they could have easily set up financial standards to be applied for
admission. The language here is broader.
"/ Vdverse circumstances, failing health or other disabilityw could also involve, for ( exampl~- provision of help to overcome a physical disability. This interpretation of the
statute is supported by the language of A. R. S. section 41- 923, subsection D which requires
a person who is admitted to the Home to pay the State for the cost of his care to the
extent possible. If financial inability to care for oneself is a requirement for admission,
this provision would not be included in the law.
CONCLUSION:
The use of the Miners' Hospital Endowment Fund for any purpose other than care of
disabled miners in a miners' hospital is inappropriate. A separate certified hospital for
disabled miners should be established in Arizona in accordance with the Enabling Act.
However, admission requirements for such a hospital, other than the requirement of being
a disabled miner in this State, are left to the Legislature to determine,
Although residency requirements for admission to the Pioneers' Home and Miners'
Hospital may be questioned under constitutional doctrines enunciated in recent United
States Supreme Court decisions, it is not possible to predict a court decision on this issue
with certainty. --
Finally, A. R. S. section 41- 923, subsection A, paragraph 4 does not limit admission
to the Pioneers' Home to those who do not have the financial ability to provide for
themselves.
CC: William Thomson, Manager < Performance Audit Division

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PERFORMANCE AUDIT
PIONEERS' HOME
AND HOSPITAL FOR DISABLED MINERS
Report to the Arizona Legislature
By the Auditor General
December 1986
DOUGLAS R NORTON, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
December 8, 1986
Members of the Arizona Legislature
The Honorable Bruce Babbitt, Governor
Merle Farmer, Superintendent
Pioneers ' Home
Transnitted herer~ itb is a report of the Pucitcr Ceneral, Performance
A u d i t of the Pioneers' Home end the Hospital for Disabled Niners. This
report i s i n response to the Jtily 26, 1? F5 resol~ ltion of the J o i ~ t
Legislative Oversight Comi ttee.
The report addresses the need for the Pioneers' ticre and examines i t s role
i n providina long- term care for elderly Arizonans. The audit found that
the purpose of the Hcme has chan9ed since i t was created i n 1911.
Criginally, the Home cared for the nien and women who settled the Arizona
Territory. Today the Hcme cares for a mall segment of Arizona's
elderly. The audit also found that the Pioneers' Home has inappropriately
used funds from the Hospital for Dis~ bled F4iners Endowment Fund to care
for non- miners who live a t the Home. In addition, the report recommends
that the Home strengthen its procedures for eval uating residents'
financial a b i l i t y to pay for their care a t the Hone.
l4y staff and I will be pleased to c'ircuss or c1 arify items i n the report.
Respectfully submitted,
DOUCRJI. U No rton
Auditor General
Staff: Uil 1 iaa Thonson
Mark Fleming
Nancy Lcvell
Patricia !+ I. Krueger
Cindy G. Whi taker
Joseph D. Moore
Enclosure
2700 NORTH CENTRAL AVE. SUITE 700 PHOENIX, ARIZONA 85004 ( 602) 255- 4385
SUMtlARY
The Office of the Auditor General has conducted a per
Arizona Pioneers' Home and the Hospital for Disabled
a July 26, 1985, resolution of the Joint Legislativ
This performance audit was conducted as a part of
forth in Arizona Revised Statutes ( A. R. S.) SS41- 2351
A1 though statutorily establ ished as separate inst1 t u r ; I ul13, ... -
Pioneers' Home ( APH) and the Hospital for Disabled Miners currently
operate as a single, State funded, long- term care facility. The Home is
located in Prescott and presently houses 152 residents, five of whom are
miners. Admission i s based on eligibility requirements specified in
A. R. S. SS41- 923 and 41- 942. The Home i s funded by General F~ ind
appropriations, earnings from Endorment Funds and donations. Residents'
payments for care offset General Fund appropriations.
The Need For The Pioneers'
Home Is Changing ( see pages 15 through 24)
The purpose of the Arizona Pioneers' Home has changed since i t s creation
in 1509. The Home was originally established for Arizona pioneers who
had contributed t o the development of the Territory and State in i t s
early years. APH has met this goal by providing high quality care a t a
reasonable cost. However, statutes no longer require applicants to have
been actively involved in the development of Arizona. As a result,
APH's role i s now shifting to a nursing home for long- time Arizona
residents. Currently, only 31 percent of APH residents can be
considered pioneers. ;: oreover, PPP serves only a small portion of
Arizona ' s elderly population needins 1 ong- term care. Of the
approximately 5,600 publ icly supported people in 1 ong- term care
facil i ties, APH accounts for approximately 3 percent. blast publ icly
funded long- term care in Arizona is provided by the counties. Expanding
the State's role in providina indisent lonptern care would
Siani ficantly exceed APE'S annual appropriation. Because the Home no
longer serves a unique purpose and i t s ability to neet stateride needs
for long- term care is l i ~ i t e d , the Lezislature needs to deterpine if RPH
i s s t i l l needed.
continued as a residence for Arizona's elderly, at least
I d be addressed. First, the population to receive care
clearly defined. P, lthough tax supported health care
ona are for the indiaent, APH statutes currently do not
require residents to be indigent. Further, more emphasis should be placed
on serving a statewide population. Second, the ability of the existing
building t o meet increasing needs for skilled nursing care should be
considered. In addition, a1 though the facil ity i s we1 1 maintained, recent
DHS inspections express concern over some structural items due to the ase
of the building.
The Arizona Pioneers' Home Has
Inappropriately Expended Money From
Ihe Miners' Hospital Endowment Fund ( see pages 25 through 30)
APH's use of the Miners' Hospital Endowment Fund violates the Arizona
Enabling Act. In the last 14 years APH has expended more than $ 3 million
from the Iliners' Hospital Endowment Fund and approximately 95 percent of
these expenditures may have been for purposes other than the care of
miners. The Fund was created to support a disabled miners' hospital as
required by the Arizona Enabling Act. However, the State never built a
miners' hospital. Instead, i t has allowed disabled miners to be admitted
t o and cared for at the Arizona Pioneers' Home, although APH i s not
certified as a hospital. A Legislative Council Opinion states that the
use of the Fund fcr any purpose other than the care of disabled miners in
a miners' hospital i s inappropriate. Continued violation of the terms of
the Enabl i ng Act increases the State's potential 1 iabil i ty.
The Legi sl atere sholil ( 1 discontinue appropristing, and Apt! shoul d
discontinue using, any money frcm the Pliners' Hospital Endowment Fund. To
resolve problem with future use of the Fund, the State should petition
Congress for a change in the Enabling Act.
The Arizona Pioneers' Home Eleecs To Improve
Its Payment For Care Determinations ( see pages 31 through 35)
APH needs t o strengthen i t s process for determining how much resicients
should pay for their care. A. E. S. S41- 923 and RPH pol icy require APH
residents tc pay monthly fees, based on their ability t o pay, for costs
incurred by the State for their care. A review of recent APH admission
files indicates that APH staff generally exclude nonincome- producina
assets, principally real estate and personal property, such as
automobi1es, i n determining an appl icant's ability t o pay. Further,
varied treatment of assets i n determining payments for care has resulted
in inconsistent treatment of some residents.
The Home also needs to establish a policy of including i n payment for care
determinations the fair market value of assets disposed of within a
specified period of time prior to admission or during residency a t APH.
In addition, APH shoul d verify financial information submitted by
appl ican ts.
TABLE OF CONTENTS
Pa9e
INTRODUCTION AND BACKGROUI.! D . . . . . . . . . . . . . . . . . . . . . 1
FINDING I: THE h! EED FOR THE PIONEERS'
HOP. IE IS CHAIJGING . . . . . . . . . . . . . . . . . . . . . . . . 15
Purpose Of The Home Has Changed . . . . . . . . . . . . . . . . . 15
The Need For The Pioneers' Home
Should Be Evaluated . . . . . . . . . . . . . . . . . . . . . . . 17
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . 23
FINDING 11: THE ARIZONA PIONEERS' HOME HAS
INAPPROPRIATELY EXPENDED MONEY FROM THE
HOSPITAL FOR DISABLED !< IIMERS' ENDOWbIENT FUND . . . . . . . . . . 25
Required ' Hospital Not Establ ished . . . . . . . . . . . . 25
State May Be Liable For Inappropriate Use Of
Funds And l\! oncompl iance Mi t h Enabl ina Act . . . . . . . . . . . . 27
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . 30
FIMDING I11 : THE ARIZONA PIONEERS' DO? i. E NEEDS
TO If4PROVE ITS PAYMEMT FOR CARE DETERMINATIO!~ S . . . . . . . . . 31
APH Does Not Adhere To State Law In
Determining Residents' Ability To Pay For Czre . . . . . . . . . 31
APH Needs To Strengthen I t s Policies
AndAdhereToThem . . . . . . . . . . . . . . . . . . . . . . . 33
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . 35
OTHER PERTINENT INFORMATION . . . . . . . . . . . . . . . . . . . . . 37
Personal A1 1 owance Deduction . . . . . . . . . . . . . . . . . . 37
AREAS FOR FURTHER AUDIT . . . . . . . . . . . . . . . . . * . .
AGENCY RESPONSE
Legislative Council Memorandum
APPENDIX
LIST OF TABLES
Page
TABLE 1 - Arizona Pioneers' Home And
The Miners ' Hospital
Expenditure And Budget Detail
F( Uisncaaul diYteedar) s . 1.98.3-. 84. T. hr. ou. gh. 1.98.6-. 87. . . . . . . . . . . . 5
TABLE 2 - Arizona Pioneers' Home And
The Miners ' Hospital
Staffing . . . . . . . . . . . . . . . . . . . . . . . . . 6
TABLE 3 - Year APH Residents Entered Arizona . . . . . . . . . . . . 16
TABLE 4 - Indigent Persons Receiving
Lon$- Term Care By County . . . . . . . . . . . . . . . . . 18
LIST OF FIGURES
FIGURE 1 - Arizona Pioneers' Home And
The Hospital For Disabled Miners
Revenue Sources For Expenditures During
Fiscal Year 1985- 86 . . . . . . . . . . . . . . . . . . . 4
FIGURE 2 Statewide Distribution of Elderly
Pcpul ation By County Compared To
Residence of APH Residents A t Time Of Admission . . . . . 2 1
INTRODUCTION AND BACKGROUND
The Office of the Auditor General has conducted a performance audit of the
Arizona Pioneers' Home and the Hospital for Disabled Miners in response to
a July 26, 1985, resolution of the Joint Legislative Oversight Committee.
This performance audit was conducted as part of the Sunset Review set
forth in Arizona Revised Statutes ( A. R. S. ) SS41- 2351 through 41 - 2379.
The Arizona Pioneers' Home ( APH) and the Hospital for Disabled Miners
currently operate as a single, State funded, long- term care institution
located in Prescott. The Pioneers' Home was established in 1G09 and
opened in 1 The Hospital for Disabled was statutorily
established in 1929, as required by the Arizona Enabling Act, and a1 though
a separate facility was never built the Hospital i s located in the
Pioneers ' Home.
The goal of APH i s to " provide a home into which qualified applicants may
enter and reside in an atmosphere that i s pleasant, secure and dignified
- meeting individual needs of lodging and health care." The site where
APH now stands was deeded to the State to provide a home for people who
had lived in and contributed to the development of the Territory. The
f i r s t residents of the Home were men. Women were admitted be3innina i n
1916 when the Home was willed money t o build an addition for them.
The purpose of the Hospital for Cisabled Miners was to care for miners who
had sustained injuries while working in the mining industry or who were
financial ly unabl e to support themsel ves . The statute a1 so provided that
the Superintendent of APH oversee the miners' hospital as well. Although
a hospital facility was never built, i t exists in statute and APH staff
consider the Hospital for Disabled ! liners to be a part of the Pioneers'
Home.
Admissions Reauirements
Arizona Revised Statutes set forth qualifications for admission to APH and
the Hospital for Di sabl ed Miners ' .
1
A. R. S. $ 41- 923 provides that a person i s eligible to be admitted to APH
who:
@ i s and has been a citizen of the United States and the State of
Arizona for five years prior to application for admission;
@ has been a continuous resident of Arizona for not less than 30
years;
@ i s unable to provide himself w i t h the necessities and ordinary
comforts of 1 i fe because of adverse circumstances, f a i l ing heal t h
or other d i s a b i l i t i e s ; and
o does not require care i n a hospital or skilled or intermediate
care nursing home a t the time of admission.
Likewise, A. R. S. S41- 942 provides that a person nay be admitted to the
Hospital for Disabled Miners who:
s has been employed in the mining industry i n Arizona for 20 years;
@ i s a citizen of tile United States and the State of Arizona;
s i- ias been a resident cf P, rizona for not less than 35 years;
s i s 60 years or 01 der; and
CP i s financially unable to support. himself, or !-; as suffered
incapacitatinc injuries from and i n the course of mining.
As of July 1, 1986, there were 157 residents in APH, five of whom were
miners. Residents cone predominately from Yavapai 2nd I. laricopa counties.
Yavapai Ccunty residents make up approximately 55 percent of the Home's
population, with another 20 percent from Maricopa County. APH residents
currently range from 68 to 101 years of age, w i t h an average ace of 86.
Orqanization and Services
When APH was i n i t i a l l y created i t bias placed unc'er the charge and
management of the Board of Control of the Territory of Arizona. Later the
Governor assumed total responsibility. In 1973 the Director of the
Department of Health Services ( DHS) was made the responsible official for
APH. While under the auspices of DHS, the Pioneers' Home was maintained
as a 1 icensed 1 ong- term care facil i ty. In 1976, however, responsibil ity
for the Home was returned t o the Governor, who appoints the
Superintendent. As a result of this realignment, APH i s n o t required to
be a licensed nursing care facility. However, DHS i s required to inspect
the Hone a t six months intervals.
Although APH, by statute, cannot accept people requiring intermediate or
skilled nursing care, APH provides three levels of care - personal,
intermediate and skilled - for residents who may require such care after
admission. There are currently 188 beds available for APH residents, 64
of which are for people needing skilled care. In addition, a1 though APH
i s not able to provide hospital services a t the Home, residents do receive
these services at area hospital s,
Budqet and Personnel
APH i s funded through the General Fund and through various Endowment and
Donation Funds. Since fiscal year 1983- 84 approximately 82 percent of the
Home's operating costs have been paid from the General Fund. The
remaining costs are paid from the State Charitable - APH Endowment Fund
( 1 0 percent), the Miners " osp- j tal Endowment Fund ( 7.5 percent), and the
Special Donations Fund ( 1 percent). Figure 1 ( page 4) illustrates the
percentage of expenditures from these sources for fiscal year 1985- 86. -
Table 1 ( page 5) presents APH's expenditure detail for fiscal years
1983- 84 through 1985- 86. As shown, expenditures csnsi s t primarily of
personnel- related expenses, food and other operatino costs.
FIGURE 1
ARIZONA PIONEERS' HOME
AND THE HOSPITAL FOR DISABLED MINERS
REVENUE SOURCES FOR EXPENDITURES DURING
FISCAL YEAR 1985- 86
LEGEND
4 Special Donations ($ 31 , I 23) 1.1 %
Figures In parentheels mpreeent expendftures.
Source: Prepared by Auditor General s t a f f based on f i s c a l year 1985- 86
budget information provided by APH s t a f f .
TABLE 1
FTE
ARIZONA P IONEERS ' HOME AND
THE HOSPITAL FOR DISABLED FIIEI'ERS
EXPENDITURE AND BUDGET DETAIL
FISCAL YEARS 1983- 84 THROUGH 1986- 87
( UNAUDITED )
Personal Services
Empl oyee Re1 a ted
Professional and
Outside Services
Travel
Food
Other operating(' )
Personal Services
Empl oyee Re1 a ted
Other
TOTAL
Actual
Fiscal Year
1983- 84
Actual
Fiscal Year
1984- 85
Actual
Fiscal Year
1985- 86
Estimated
Fiscal Year
1986- 87
( 1 ) Other operating ccsts not funded frcm General Fund appropriations
such as personnel , maintenance and medical expenses, are funded
through APH's Endowment and Donation Funds. APH s t a f f indicated
that i n fiscal year 1983- 84 no Endowment Funds were expended for
personnel related costs. The fiscal year 1986- 87 figures are
based on budget and appropriations documents which d i d not
anticipate expenditures for employee re1 ated services.
Source: Prepared by Auditor General s t a f f based on fiscal years 1983- 84
through 1986- t27 budget documents and information provided by APH
s t a f f .
The Endowment Funds were established by the Arizona Enabling Act. T h i s
Act provided lands to be held in trust by the State, from which earninas
are to be tised for the benefit of the Hospital for Disabled Miners and
State charitable institutions, from which APH benefits. As of July 1,
1986, the expendable portior: of the Pliners' tlospital Endowment Fund was
$ 1,274,359, while the State Charitable - APH Endowment Fund had a balance
of $ 514,912. The nonexpendable portion of these Trust Funds, ( funds not
available for agency use b u t which earn money for the expendable funds)
had balances of $ 841,919 and $ 2,539,307, respectively.
In addition, residents entering the Home since Augast 11, 1970, have been
required to pay for the cost of their care to the extent that they are
financially able t o do so. The amount i s limited by s t a t u t e to the
average monthly per capita cost of operating the Home, $ 1 ,535 for the
current fiscal year.* The resident contribution is collected by APH and
deposited into the General Fund. In fiscal years 1983- 84 throuoh 1985- 86,
these col lections represented approximately 19 percent of APHIS total
expenditures. Based on estimates for fiscal year 1986- 87, resident
coll ections will represent about 17 percent of expenditures.
Staffing a t the Pioneers' Home has remained stable a t 110 full- time
equivalent ( FTE) pcsitions for the past several years. However, since APH
makes extensive use of part- time and seasonal employees, 146 people
currently occupy these 110 FTE positions. The s t a f f i s presently
organized along functional lines, as shown in Table 2.
Table 2
ARIZOIJA PIONEERS' HOME AND
THE MINERS' HOSPITAL
STAFF ING
Department FTEs
~ dministrationI) l 10.80
Nursing 58.70
Elai ntenance 7.50
Housekeeping 11.50
Food Services 21.50
Staff
TOTALS 11 0.00 -@-
( I ) Incl uCes administrative, accounting, resident services and
a c t i v i t i e s , and pharmacy personnel.
Source: Conpil ed by Auditor General s t a f f from Arizona Pioneers ' Home
personnel records.
* Currently only one resic'ent pays the maximum amount and, as of July
1 , 1986, 17 paid nothing. Of these 17, s i x a r e miners, four are
exempt because they entered the Home before 1970, and seven have
insufficient income to be assessed.
Audit Scoce and Purpose
This audit was conducted to evaluate the need for and the adequscy of the
Arizona Pioneers' Home and the Hospital for Disabled Miners. Specifically
we examined:
The need for 2nd purpose of the Arizona Pioneers' Home,
0 APH's payment for care policies and procedures, and
o The Home's use of the Miners' Hospital Endob~ ment Fund.
In addition, we developed information concerning the residents' personal
allowance deductions. This is found in Other Pertinent Information ( see
page 37 ) .
l.! e also present the 12 factors that should be considered i n ceternining
whether the Arizona Pioneers' Home and the Hospital for Disabled ! liners
should be continued or terminated. This i s founc! in Sunset Factors ( see
page 3).
This audit \; as performed in accordance with oenerally zccepted
governmental audit standards.
The Auditor Gt? neral and staff express appreciaticn to the Superi nte~ dent
and staff cf the Arizona Pioneers' Hope for their cooperatio~ and
assistance durirq the ccurse of cur audit.
SUEfSET FACTORS
In accordance with Arizona Revised Statutes ( A. R. S.) 541- 2354, the
Legislature should consider the fol1o~: ing 12 factors in determining
whether the Arizona Pioneers' Home ( APH) and the Hospital for Disabled
Miners should be continued or terminated.
The Hospital for Cisabled Miners, which was originally intended to be a
separate institution, was never built. APH s t a f f , however, consider the
Hospital to he an integral part of APH.
1. The objective and purpose in establishing APH and the Hospital for
Disabled Miners
APH was set up to provide a home for Arizona pioneers. The 1309 Act
establishing APH provided that people who met age and residency
requirements, and had " been active in the development of Arizona" were
entitled t o become residents of APH. Thus, the original intent in
establishing APH was t o provide a pioneers' home in which the needs of
people who had lived in and contributed to the development of the
Territory ccul d be net. The statutes have since been modified and the
requirement that people be involved in the develcpment of the State
has been deleted. Alditionally, the number of people who came t o
Arizona prior to statehood has been decreasing. This has resulted in
a shift in APH population t o long- time Arizona residents, rather than
actual pioneers who cane t o 3 frontier territory.
In 1929 the State Legisl ature statutorily estahl ished a State Hospital
for Disabled Fliners t o provide care for miners who had sustained
injuries while working in the mining industry or who were financially
unable to support themselves. The Hospital was to be located adjacent
to APH with the APH superinte~ dent overseeing both f a c i l i t i e s . P
hospital was never built, however. Instead, tviners who lreet
admittance criteria for the hospital are admitted to APH, a1 though APH
cannot provide many hospital services.
2. The effectiveness with vrhich APH has met i t s objective and purpose and
the efficiency with which i t has operated
APH provides quality care for i t s residents a t a reasonable cost to
the State. APH officials indicate that they have met their objectives
by meeting safety and sanitary requirements and maintaining a
home- 1 ike environment for their residents. APH provides personal ,
intermediate and skilled nursing care, and has been commended by the
Arizona Department of Health Services for the excel 1 ent care and
loving, caring environment i t provides for i t s residents. APH
provides i t s services a t a cost comparable to other nursing care
providers in Yavapai County, in which APH i s located.
The resident population of APH, however, i s shifting away from the
State's pioneers to 1 ong- time Arizona residents. The changinp
population indicates that the objective of the Pioneers' Home has
larcely been met. As the number of pioneers from Arizona's early
years diminishes, the original purpose for APH decreases.
The intent of establishing a hospital for disabled miners i s not being
met. Since a hospital for disabled miners was never Suil t, APH has
a @ t~ teid miners who qua1 i fy under hospi ta1 adoi ssionc c r i t e r i a .
However, APH does not provide the levels of care 9eneral ly considered
essential t o a hospital, such as suroery. Becal! se Arizona has never
established a miners' hospital i t may be 1 iitble for inappropriately
usins several mill ion doll ars from the 1: iner- s ' Eospi tal Endo~~ mcnt
Fund, contrary t o the terms of the trust established by the iirizcna
Enabl ing Act.
APH payment for care determinations are not always based on residents'
full financial ability as required by law. APH staff exclude some
assets in determining ability to pay, and APH lacks policies regarding
asset disposition prior t o and during residency at APH. Also, APH
does not. use verified resident financial information, as required by
statute. Furthermore, pol icy appl ication has resul ted in inconsistent
payments among residents.
3. The extent t o which APH has o~ erated within the uublic interest
The public served by APH consists largely of i t s residents and their
families. In this sense, APH i s operating within the public interest
since i t satisfactorily cares for these residents, having been
commended by the Department of Health Services for the qua1 ity care i t
provides.
APH's use of the Miners' Hospital Endowment Fund, however, may not be
in the interest of the general public. Although a hospital for
disabled miners i s required by the Enabling Act and Arizona Revised
Statutes, one has never existed. As a result, the State may be i n
violation of the trust established in the Enabling Act and may be
liable for several million dollars in inappropriate expenditures.
Continued use of this Fund increases the State's potential 1 iabil ity.
4. The extent to which rules anc! regulations promulaated by APH are
consistent with the 1 egi sl ative mandate
According to AQH staff, no rules or regulations have been promuloated
since the need for them has n o t been established.
5. The extent t o which APH has encouraged input from the public before
promulgating i t s rules and regulations and the extent to which i t has
informed the nublic as t o i t s actions and their ex~ ected im~ act on the
Since APH has not promulsated any rules and regulations, this factor
does not apply.
6. The extent tc which APH has been able t o investigate and resolve
comulaints within i t s . iurisdiction
Since APH is not a regulatory agency, this factor does n o t apply.
However, APH does have an informal complaint procedure t o address
residents' complaints.
7. The extent t o which the Attorney General or any other applicable
agency of State government has the authority to prosecute actions
under enabl ing legislation
APH's statutes appear t o be adequate. According t o APH staff, the
only violation addressed in the statutes i s that if a resident refuses
to pay the determined payment for care, he shall be required to leave
APH. The Home's Attorney General representative indicated that
current statutes would be sufficient to prosecute any such case.
8. The extent to which APH has addressed deficiencies i n the enabling
statutes which prevent it from fulfilling i t s statutory mandate
APH staff indicated that the statutes are sufficient to allow them to
f u l f i l l their duties. No legislation has been proposed by APH i n the
last five years and none is contemplated.
9. The extent t o which changes are necessary in the laws of APH t o
adequately comply with the factors listed in the Sunset Laws
Since the composition of the APH is chansing, the Leqislature needs t o
determine whether State supported care for the elderly i s an
appropriate pol icy. Additionally, if the Legislature decides to
continue to become more involved in providing long- term care for the
elderly, consideration should be given to defining what population
should be served.
10. The extent to irhich the termination of APH would significantly harm
the ~ ubilc health. safety or we1 fare
Termination of APH t10~ 7d not sicni ficantly harn: the pcbl ic heal t h ,
safety or welfare, since services provided a t APH are available from
counties or private health care providers. If APH i s closed, however,
the State may have a continuin? commitment t o the pioneers and other
residents currently i n the Home. All of the residents entered APH
with the understanding that they would receive care for the remainder
of their lives.
Additionally, some concern may exist over whether the current
resources of other care providers could handle the sudden influx of
residents should the Home close. For example, Yavapai County may need
t o expend nearly one- third more than i t presently does to provide for
county residents currently cared for at APH.
11. The extent to which the level of reaulation exercised bv APH i s
appropriate and whether less or more stringent levels o f regulation
Since APH is not a regulatory agency, this factor does n o t apply.
12. The extent to which APH has used private contractors in the
performance of i t s duties and how effective use of private contractors
coul d be acconpl ished
APH currently uses private contractors for service delivery, soce
housekeeping and maintenance, and has i denti fie6 areas in which
further contracting may be possible. Home official s indicate that APH
uses private contractors chiefly in the medical field, with various
physicians, 1 aboratories and a kospi tal . Total expenditures for these
contracts, after recovery of insurance claims, was $ 47,1? 2 in fiscal
year 1984- 85. APH also contracts for laundry services, for whicb i t
expended $ 50,831 in fiscal year 1S84- 85. In addition, i t uses private
contractors for various oainten~ nce services, such as for an elevator,
an alarm system, office equipment and pest control services.
APH staff icenti fied areas where further contracting may be possible,
although such uses have not been thoroughly investioated. Some areas
include additional work in maintenance and housekeeping, as we11 as
security, yard upkeep, food services and accounting.
FINDING I
THE NEED FOR THE PIONEERS1 HOME IS CHANGING
The objective of the Arizona Pioneers' Home ( AspH) has changed since the
Home's construction. The original purpose of the Home was to provide for
elderly Arizona pioneers. Currently, only 31 percent of the residents are
pioneers, and the percentage will continue to decrease. The State should
review the need for the Pioneers' Home and evaluate the alternatives for
i t s role in caring for Arizona's elderly.
Purpose Of The Home
Nas Chanaed
The Arizona Pioneers' Home i s no longer exclusively a home for individuals
k ~ h o assisted in the founding and development of Arizona. The Home was
established in 1909 to provide for Arizona's early s e t t l e r s , b u t in recent
years admission requirements have been expanded to include other Arizona
ci tizens. A1 though the Home's current population includes some pioneers,
they no longer represent a majority of the residents. The Home has net
i t s original purpose, b u t i t s roie i s now shifting to a nursins home for
1 ong- time Arizo~ a residents.
Admission requirements have chanced - The provisions for entry into the
Pioneers ' Home have changed significantly since 1909. The original
admission requirements were set forth in 1909 Arizona Territorial Statutes.
Any person of cood character who shall have been a
resident of Arizona for n o t 1 ess than twenty five years
and who shall have been active in the development of
Arizona, and who shall have reached the age of sixty
years or over, and who, because of adverse
circumstances or failing health or other disability,
shall be unable t o properly provide himself with the
necessities and ordinary comforts of l i f e . . . .
[ Emphasis added.]
Legislative intent was t o care for ~ r i z o n a ' s early settlers. IJhen the
Home opened in 1911, individuals meeting the 25 year residency requirement
were people who lived in a frontier society. Early newspaper articles
about the Home refer to i t as a way of rewarding early settlers for the
they faced. Currently, APH residents are required to live 30
Irizona, be 65 years of age and not require skilled nursing care
me of admission.* The requirement that the applicant must have
3d to Arizona's development was deleted by s t a t u t e i n 1978.
f person born i n 1921, entering Arizona i n 1950 and residing
sly i n the State would now be e l i g i b l e to enter the Pioneers'
Home.
The populaticn i s changing - Pioneers now represent a small percentage of
APH residents. The Arizona Historical Society defines a pioneer as one
who entered Arizona i n 1912 or e a r l i e r . Currently, only 45 APH residents
( 31 percent) were born i n or entered the State i n 1912 or e a r l i e r . The
remaining 69 percent do not meet the Historical Society's definition of
pioneer. In addition, of 146 residents of the Home, 32 ( 22 percent)
entered Arizona i n 1940 or l z t e r . Table 3 shows the years APH residents
entered Arizona.
TABLE 3
- Year
TOTAL
Number Entering Arizona Percen taoe
( I ) Total excl udes miners.
Source: Arizona Pioneers ' Home admission records for residents of the
Home on June 1 , 1986.
* According to the Arizona Legislative Council, - any residency
requirerent may be unconstitutional . Leclisl ative Council cited two
cases - ~ hapiro v. Thompson, 3% 0 . S . 618 -( 1969) and Memorial Hcspital
v. Flaricopa County, 415 U. S. 250 ( 1974) - i n which the courts ruled
residency requirements to be unconstitutional . Po~/ ever, neither case
gives a distinct direction pertaining to Pioneers ' Home residency
requirements. U n t i 1 such standards are ruled unconstitutional the
Pioneers' Home must abide by residency requirements.
APH purpose largely achieved - The changing population indicates that the
original objective of the Pioneers' Home has largely been met. As the
number of pioneers from Arizona's early years diminishes, the need for the
Home decreases. APH has achieved i t s goal by providing high quality care
a t a reasonable cost. Recent Department of Health Services ( DHS)
semiannual inspections found only minor violations. Further, DHS
concluded the Home " offers a caring and loving environment with excellent
care provided for i t s residents." The Governor's Office and DHS receive
few complaints from residents or farnil ies concerning APH, and residents
generally had no complaints on care they received. In addition, care i s
provided a t a reasonable cost. For fiscal year 1385- 86 the cost of care,
including all medical expenses, a t APH was approximately $ 45 per day.
This is comparable t o private f a c i l i t i e s i n the vicinity, whose charges
range from $ 23 to $ 65 a day, not including medical expenses.*
The Need For The Pioneers'
Home Should Be Evaluated
The chan~ ing population of the Pioneers' Home raises questions about the
continued need for the Home. Most publicly funded long- term care in
Arizona i s prcvided by the counties. The Home i s the only form of State
supported long- term care in Arizona, and serves only a small portion of
the elderly in need of 1 ong- term care. The Lecislature needs to determine
whether the Pioneers' Home should be continued to serve a limited
population. If the Heme is continued, several critical issues need to be
addressed.
Publicly funded Icnc- term care in Arizona - Assisting individuals in
meeting the costs of long- term care i s largely a county function. With
the exception of the Arizona Pioneers' Home, the State provides l i t t l e
funding for 1 ong- term care .** Each county appropriates funds to support
- provides medical care for i t s residents as required hy A. R. S.
$ 41- 924 B. The Home receives some rei~ bursement for the cost of this
care from resident insurance policies b u t does n o t receive any
payments from the Arizona Health Care Cost Containment System ( see
Area for Further Audit I~ lork, page 39).
** Limited State funding i s now available for counties to provide
1 ong- term care. The 1986 Legi sl ature appropriated $ 5.5 mil 1 ion to
assist counties in meeting the cost of indigent long- term care for
fiscal year 1986- 87.
indigent residents who need 1 ong- term care. Financial c r i t e r i a for
determining e l i g i b i l i t y differs from county to county. Arizona counties
support approximately 5,500 indigents i n 1 ong- term care f a c i l i t i e s ( see
Table 4).
TABLE 4
INDIGENT PERSONS RECEIVING LONG- TERM CARE BY COUNTY
County
Apache
Cochi se
Coconino
Gila
Graham
Green1 ee
La Paz
Maricopa
Mohave
Navajo
Pima
P i nal
Santa Cruz
Yavapai
Y uma
- --
Number
7
187
45
8 1
4 4
20( 1)
13( 1 )
3,000( 1 )
140
6 4
1,175
196
57( 1)
206
200( 1)
Date
September 1986
FY 1985- 86
September 1 986
July 1986
September 1986
September 1986
September 1986
Septenber 1986
September 1986 •
September 1986
FY 1984- 85
September 1986
July 1986
Au~ ust 19F6
August 1986
TO TA L 5,435
) Figures are estimated.
Source: Compiled by Auditor General s t a f f from phone surveys of counties. ( I
Compared w i t h the counties, the Pioneers ' Home serves a very small portion
of the elderly population in need of long- terrr! care. Pioneers' Hone
residents account for approximately 3 percent of the indigent population a
served by the counties.* If the State were to provide funding to meet the
costs of long- term care nok/ provided by the counties, the annual costs
would siani ficantly exceed the $ 2.5 mil 1 ion apprcpriated annual ly t o the
Pioneers ' Home. For example, Yavapai County, w i t h approximately 200 a
indigents receiving county 1 on!- term care, has budgeted $ 1.8 mil 1 ion for
fiscal year 1986- 87.
- k A1 though no current APH residents pay the f u l l c o s t of their care,
most pay for some portion of the care. Assuming that all present ( I
residents are indigent, therefore, overestimates the extent to which
the Pioneers' Home serves indigent Arizonans in need of long- term care.
Thus, the Pioneers' Home provides long- tern care to a sirall portion of
Arizona's elderly. Although the Home once had a unique purpose i n
providing care to early s e t t l e r s , few current residents can be considered
pioneers, and the number will inevitably decl ine. The Legislature
addressed the changing population i n 1970 when i t deleted the requirement
for applicants to demonstrate their active participation i n the
development of Arizona. However, the Legislature needs to determine
whether there is a continuing need for a State supported long- term care
facility that serves such a limited population. The Legislature could
phase out the Pioneers' Home w i t h l i t t l e harm to the public or current
residents. Even if the Pioneers' Home i s terminated, the Legislature
should consider whether the State has a continuing obligation t o care for
the residents inasmuch as all the current residents entered the Home with
the expectation that they would receive care for the remainder cf their
1 ives.
If the Legislature determines i t i s in the State's best i n t e r e s t t o
maintain APH as a residence for the elderly, a number of issues should be
addressed. These issues include the population to be served and the
demands on an aging facility.
Population served - If the Legislature determines that the Pioneers' Home
should be continued, the population t o receive care shculd be more clearly
defined. Generally, tax supported health care systems in Arizona
determine eligibility based on indigency. However, APH does not care only
for those who cannot afford to pay for care. According to an Arizona
Legislative Council Opinion, current statutes do not require residents to
be financially indigent to gain admission. Since admission c r i t e r i a
specify that elderly may need assistance in meetins daily needs, those who
can afford to pay for care are not excluded from residing i n the Hone.*
The Legislature may want to direct the Pioneers' Home to consider
indigency in evaluating applications for admission.
$; If the Home continues to admit financially secure residents, i t should
ensure that the monthly payment for care is based on ability to pay
( see Finding 111).
If the Home i s continued, more emphasis should be placed on serving a
statewide population. Yavapai County residents appear to benefit
disproportionately from the Home. Presently, more residents enter from
Yavapai County than any other county i n Arizona ( see Figure 2, page 21),
a1 though the County has a relatively small elderly population. To ensure
that residents of all counties have equal access to APH, the Home needs t o
provide information t o potential residents i n a1 1 counties.
Facility - To continue to provide high qua1 ity care, APE needs to address
two areas regarding the facility i t s e l f . These areas are the need for
more skilled nursing care and maintenance of an aging facility.
APH will need to increase i t s capacity to provide skilled nursing care.
Skilled nursing care i s required by patients who f i t one or more of the
foll owing characteristics.
s Need assistance of one or more staff person to walk, move from
bed, chairs or t o i l e t , or are bedfast
6 Require maximum assistance in bathing, dressing, grcoming and
feeding
Q Are disoriented, confused, conbative, withdrawn or depressed
a Require complex medications or treatments needing close monitoring
FIGURE 2
STATEWIDE DISTRIBUTION OF ELDERLY POPULATION BY COUNTY
COMPARED TO RESIDENCE OF APH RESIDENTS AT TIME OF ADMISSION
Maricopa
57%
0" 2P0i. m25a6
Coconino 1.2% Others *
17.4%
Yavapai 4.3%
Statewide Population 65 And Over
Coconino 2.6%
Others * 6.6%
Maricopa
30.3%
Yava pal
54.6%
Residence At llme Of Admission To APH
* Others represents the remaining counties i n Arizona. Navajo county
had f i v e people enter APW, the counties o f Apache, Gila, Graham,
Mohave and Yuma had one person each enter the Horne. The counties o f
Cochise, Greenlee, La Paz, Pinal and Santa Cruz d i d not have anyone
e n t e r t h e Home.
Source: Csmpi l e d by Auditor General s t a f f from Pioneers " om Admission
records f o r 152 current residents o f the Home as o f June 1 , 1986,
and from Long- Term Care i n Arizona, July 1984.
Skilled nursing care a t APH has more than doubled over the past three
years. In 1983 APH averaged eight individual s receiving ski1 led nursing
care each month. In 1986 the monthly average increased t o more than 18
people. The Director of Nursing believes that the Home needs to consider
alternatives for increasing the number of skilled nursing beds. As more
APH residents require skilled nursing care, additional s t a f f , equipment
and medical supplies will be necessary to meet the residents' needs. The
Home will need to consider those future needs in allocating resources.
In addition, the facility itself may be inadequate to meet the future
needs of residents. A1 though APR maintains the facility very well, i t
does not meet the current requirements for long- term care f a c i l i t i e s in
Arizona. The Department of Health Services conducted a special inspection
of APH a t the request of the Auditor General and found that i t d ~ e s n o t
meet the requirements that would apply if the Home were a licensed
institution. The major deficiencies invo7ve fail urc ts meet National Fire
Protection standards for health care institutions. Far example, a1 1
floors lack smake partitions, all stairs do not meet exit access
specifications, some f i r s t floor corridors dead end, and some office room
doors are n o t smoke tight. The inspectors also found that t o i l e t rooms,
bathrooms, u t i l i t y rooms and janitors' closets on a11 floors d i d n o t have
mechanical ventilation as required by State regul atisns."
A Joint Legislative Budget: Gonlmittee ( JLBG) staff study shows i'
Pioneers' Home ta be the second oldest facility i n the statewide building
inventory. JLBC staff cor. scIuf% ed that the maintenance needs of buildings
increase as the building ages. For ' 1985, JLBC staff estimated that the
Pioneers' Home would need $ 159,100 ( 3.8 percent of the building's value)
JC APH stF= ra1 deficiencies are even greater when compared to 13HS
construction standards fcr new f a c i l i t i e s . To meet these standards
DHS inspectors found t h a t : 811 corridors i n the Home would need to be
widened to 8 feet, a% l exit doors wsul d need to be widened, as would
any patients' doors t h a t have not already been modified, and each
floor would need to have a nurses station, The inspectors also noted
" many othcr mechanical, electrical and plumbing requirements that will
add significantly to this la" st." TBheir report cites as examples
addi tional electrical cutlets, msdi f- ication of mechanical systems and
additional pl umbing f i x t u r e s ,
to properly maintain the structi~ re. In contrast, JLBC s t a f f ' s next
highest estimate for other buildings on State inventory was 1.7 percent of
the bui 1 dings ' current val ue.
CONCLUSION
The Arizona Pioneers ' Home is no longer needed to meet i t s original goal .
The objective of the Home has been modified since i t was constructed in
1911. The Legislature should evaluate the continued need for the Home.
If APH i s continued, the population to be served and the ability of the
existing building t o meet future needs should be considered.
1. The Legislature should review the role of the Arizona Pioneers' Hor- e
in prcviding long- term care t o the elderly. The followin9 shoui d be
considereo.
a. Whether the Pioneers' Home should be continued.
b. If the Home is continued, what specific population group shouic'
be served:
e indisents,
long- term residents of the State,
any other group.
c. If the Heme is not continued, how to provide appropriate care for
the Home's current residents.
2. If the Picrieers' Home i s continued, the Home should c'eter~ ine and
utilize the best means of advertising i t s services to potential
residents throuchout Arizona.
3. The Arizona Pioneers' Home should develop rt plan, in conjunction with
the State's five- year land, building and improvements planning
process, to ensure that the facility continues to adequately serve the
needs of i t s residents.
FINDING I1
THE ARIZONA PIONEERS ' HOME HAS INAPPROPRIATELY EXPENDED
MONEY FROM THE MINERS' HOSPITAL ENDOWMENT FUND
The Arizona Pioneers ' Home ( APH ) has inappropriately expended money from
the Fliners' Hospital Endoranent Fund. A1 though a hospital for disabled
miners i s required by the Enabling Act and Arizona s t a t u t e s , one has never
existed. As a result, the State may be in violation of the trust
established i n the Enabling Act, and may be l i a b l e for several million
dollars of inappropriate expenditures.
Required Miners ' Hospital
Not Establ ished
Althou~ h the Arizona Enabling Act and Arizona Revised Statutes ( A. R. S.)
direct the State to establish a hospital for disabled miners, one has
never existed. The United States government, i n bestowing Arizona
statehood, set aside a certain portion of land to be held i n t r u s t by the
State, proceeds from which are intended for named beneficiaries. The
Enabling Act specifically provides 50,000 acres of land for a hospital for
disabled miners. An additional grant of 50,000 acres of 1 ants has made on
February 20, 1929. The same year, the Arizona Legislature passed a b i l l
calling for the establishnient of a hospital for disabled miners to be
built adjacent to APH. The Miners' Hospital Endowment Fund presently has
an expendable bzlance of more than $ 1.2 mill ion and a nonexpendable
balance of nearly $ 842,000.* In fiscal years 1983- 84 and 1384- 85, the
* The idiners' tlospital Endowment Fund consists of three separate
accounts, two of which are nonexpendable, i . e., not available for
agency use, and are maintained solely by the State Treasurer. The
Treasurer invests the mney in the nonexpendable accounts and deposits
earnings from these investments to the tlospi t a l f o r Disabled Miners '
expendable account.
2 5
expendable earnings of $ 514,679, and deposits of
541,463 to the nonexpendabl e account.*
; tab1 ishing a disabl ec! miners' hospital , Arizona has a l l owed
t requirements to be admitted to APH. T h i s appears to be i n
the terms sf the trust agreement set forth i n the Enablina
) H does not provide many services commonly thought to be
- - l a hospital. The courts have generally held that, a t a
m i n i m u m , a hospital provides surgical care. APE i s not licensed or
certified as either a nursing home or a hospital, and does not have
f a c i l i t i e s to provide surgical care for its residents.
Over the years, miners have comprised only a small portion of the APH
resident population. For exi; ii? ple, i n the l a s t ten years no more than ten
miners have 1 ived a t APH in any one year. Presently, of the 158 residents
a t APH on1 y five are miners. Such 1 ow numbers may partly be the resul t of
Arizona statutes which estahl i sh r e s t r i c t i v e admissions qua1 i fications,
particularly for residency, age and employment requirements.** The
Enabling Act does not establisii any entry requirenents.
* Pliners ' Hospital Endokment Fund iracome incl cdes incnies received frem
earnings of trust lands, interest on invested noney, and
reimbursements from resident insurance policy payments for covered
medical expenses. For fisczl years 19l3-@ 4 and 1981- 85, averace
earnings were: from medical reimbursements, $ 77,? 00; from trust
lands, $ 31 9,217; and from invested money, $ 159,053
** Arizona Revised Statutes ( 1,. R. S. ) f 41-? A? estahl ishes qua1 ifications
for admission to the Hospital for Cisabled 17iners. A person i s
eligible who: ( 1 ) has followed the occupation of rining for 20 years
i n the State; ( 2 ) i s a citizen of the United States and the State of
Arizona; ( 3) has been a resident of Arizo~ a for a t 1 east 35 years; and
( 4) i s 60 years of age or older and i s ~ ~ n s h lteo support himself, or
has suffered incapacitating injuries frcn snd i n the course of
mining. The Arizona Le9is1 ative Council issued an opinion which said
that since the Enabling Act does not specify any intent by Congress
regaraing admissions requirements for the hospital, i t is apparently
l e f t up to the State to decide. Based on this reasonin?, the opinion
stated that A. R. S. 541- 942 appears to be valid.
State May Be Liable For Inappropriate Use Of
lunds And N O ~ C O M Di~ a nce With tnabl ina Act
The State of Arizona may be liable for inappropriate use of the Miners'
Hospital Endowment Fund because it has not complied with the terms of the
Enabl ing Act. APH has continuously used the Miners' Hospital Endowment
Fund inappropriately. Based on a miners' hospital case in the State of
New Mexico, the courts may find Arizona in violation of the trust and
order the State to comply with the intent of the Enahling Act. The
State ' s a1 ternatives to resolving this problem are somewhat 1 i m i ted.
APH uses Miners' Endowment Fund - Although APH does not provide many
hospital services, i t has continuously used the Miners' Hospital Endowment
Fund to support i t s operations. Over the years the Leaislature has
appropriated and APH has expended money from the Miners' Hospital
Endowment Fund t o meet operational expenses. The F~! nd has been used
consistently since at least 1941. APH currently uses the Fund to pay for
medical expenses incurred by residents a t the institution, regard1 ess of
\ vt? ether or not they are miners. The Fund i s also used for personnel
expenses not funded in the general appropriation that APH receives each
year. Furthernore, since July 1972 approximately 95 percent of the
expenditures from this Fund may have been used for purposes other than for
the care of miners. In the 1 ast 14 years alone, APH has expended more
than $ 3 nil 1 ion from the Fiiiners ' Hospital Endowment Fund. * Expenditures
from the Fund over that period ranged from $ 130,679 to $ 394,600 and
averaged approximately $ 220,740 per year. For fiscal years 1983- 84
through 1985- 86, money spent frcm the Miners Hospital Endovment Fund
accounted for about 8 percent of APH's total expenditures.
* Minersi Hospital Endowment Fund expenditure records co~ rld be traced
back only to 1941. Between 1941 and 1971 ( 1942 excluded because
records were n o t avail able), more than $ 1.9 r i l l ion was expended from
the Endovment Fund. Records showing the number of miner residents a t
APH were avail able only frcm 1972.
A court ruling on a case in b! ew F: exico sucgests that !, PH's use of the
Miners' Hospital Endowment Fund contradicts the terns of the trust
established in the Enabling Act. The New Mexico case i s especially
pertinent because Arizona and Ne\ g Mexico Enabl ins P. ct provisions
concerning a hospital for di sabl ed miners are i dentical .
New Mexico found 1 iable - The State of New Mexico was found in violation
of the trust established t o provide a hospital for disabled miners. The
New Mexico miners' hospital was opened for operation in 1905. In 1971 the
State allowed the miners' hospital accreditation to lapse and closed the
acute care portion of the hospital . Subsequently, the United States
government and a croup of disabled miners in New Mexico broucilt suit
against the State. They claimed that the State's miners were not
receiving the care intended by the terms of the trust agreement set forth
in the Mew r4exico Enablinc Act. The State contended that i t :.! as
fulfilling the terms of the trust by providing hospital care for miners a t
other state and private institutions. The State paid miners' medical
bills at these other institutions using Niners' Hospital Endowment Funcs.
The Federal District Court found E! ew Mexico guilty of a breach of trust in
i t s handling of the miners' hospital. The Court ruled that since the
purpose of trust provisions contained in the Enabling Act k; as t o establish
and maintain a miners' hospital, the State could not expend trcst monies
at other hospital s, even though the money was beins used t o provi Ce heal th
care to miners. The court further ruled that trust mcnies could only be
used for the facility the State operated as a miners' hospital. As a
result, the State of New Flexico was founu cuil ty of a breach of trust i n
i t s handling of the miners' hospital. The court orc'ered the State to
restore money inapprcpriztely spent, r ~ tih interest, t o the iliners '
Hospital Endowment Fund, and to construct a licensea and certified ceneral
hospital. The Tenth Circuit Court of Appeals affirred the District
Court's decision.*
* Officials in /! ew Flexico indiccted that because of the court rulinc
they were required t o pay approximately $ 1.9 million tc the Miners'
Hospital Trust Fund. In addition, they estimated that nearly $ 3
million was expended from the ! diners1 Hospital Trust Fund t o restore
the miners ' hospi t a I t . 0 a 1 icensed and certified general hospital for
the care of miners.
Courts may find Arizona l i s b l e - The courts may similarly find Arizona
liable for inappropriate use of funds and order the State to comply w i t h
the intent of the enabling act. Like Flew Mexico, Arizona has been using
its Disabled Fliners' fiospital Endowment Fund in an i n s t i t u t i o n other than
a miners' hospital, and for the care of non- miners. Therefore, based on
the Kew Mexico ruling, the State of Arizona may likewise be found i n
violation of the terms of the trust. This conclusion is further supported
by an Arizoca Legislative Council opinion, which follows.
The use of the Miners' Hospital Endowment Fund for any
purpose other than the care of disabled miners i n a
miners ' hospital is inappropriate. A separate
certified hospital for disabled miners shoul d be
establ ished in Arizona i n accol- dance with the Enabl ing
Act.
The State continues to increase potential 1 i a b i l i t y from continuecl use of
the Disabled Miners' Hospital Endobment Fund and the nonexistence of a
hospital for disabled miners. The courts may, as they did i n New Mexico,
find all or part of the expenditures from this Fund to be inappropriate
and crder the State to reivburse, with i n t e r e s t , monies spent from the
Fund. In addition, the courts may require that Arizona comply w i t h the
intent c f the Enabling Act and establish a 1 icensed and certified general
hospital for disabled miners.
S t a t e ' s a1 ternatives limited - The a1 ternatives available to the State to
resolve this problem are scnewhat f i ~ i t e d . Lesislative Council s t a f f
indicated that three a1 t ~ r n a t i v e se xist.
e The State coul ti build a miners' hospital as required by the
Enabling Act. This cption nay cot Se e n t i r e l y f e a s i b l e , hoviever,
since the number of people that nay be el i g i b l e f o r care in such
an insti tction i s c~ lrrently ~~ nknown. Ft? rthermore, the State may
n o t feel that the expense is warranted.
Q The State cclilo' : lait r n t i l the patter regardin? a disabled
nincrs' hospital i s contested i n court. There i s some discussion
as t o !: herher the cccrts that have jurisdiction over Frizcna
~ ; : i ~ hrut l e differently than the Cistrict Court for the District
of ;' el; !?? xico d i d in t h ~ ct a se. This a1 ternative could also be
very time- consurninq, tzking several years before any resolution
i s achieved. Fcr s r ~ ~ p l etk, e tlew I'iexico cese tool: approxi~ ately
ten years t o resol ve.
s The State, through i t s congressional representatives, coul d
petition Congress for a chance in the Enabling Act. Legislative
Council staff indicated that this may prove to be a very
time- consuming and di fficul t process. However, i f the State
wishes to use the Miners' tiospital Endowent F~ rncl, i t may be the
only feasibl e sol ution . The preceding a1 ternatives require
Arizona to either construct a hospitzl which may nct be justified
by past or current use or refrain From using available funds
during a long and uncertain legal process.
Regardless of which alternative the State elects to pursue, the
Legislative Council Opinion points o u t that current and continued use of
the Hiners ' Hospital Endowment Fund remains inappropriate unti 1 a hospital
for disabled miners exists.
CONCLUSION
APH has inappropriately expended Roney from the Miners' Hospital Endcment
Fund. Although a hospital for disabled miners i s re~ uirec' by Arizona
statutes, one has never existed. Funds earmarked for a hospital have
instead been used by APH. As a result, the State of Arizona may be 1 iabl e
for use of funcs in violaticn of the ccnditio~ s of the trust and be in
nonco~ pila nce with the Enabl i ng Act.
1 . The Arizona Legisl zturc should discontinue appropriati np, and APE
should discontiriue csing, any noney from the Disabled ! liners1 iiospital
Enco~: nxent F c ~ a .
2. The State shculc' petition the llnitec' States Ccrigress tc amend the
Arizcca Enabl ing Act t o allci; the i: inersl ticspital Endcr~ ment Fund to
be used for ctkter purposes.
FINDING I11
THE ARIZONA PIONEERS' HOME NEEDS TO IMPROVE
ITS PAYNENT FOR CARE DETERMINATIONS
The Arizona Pioneers' Home ( APH) needs to improve i t s process for
determining resident payments for care. Current APH pol icies and
procedures do not conform w i t h 1 egis1 ative intent. APH shoul d strengthen
i t s payment for care policies and process.
APH Does Not Adhere To State
Law In Determining Residents'
Abilitv To Pav t- or Care
The Arizona Pioneers' Home does not comply w i t h legislative intent i n
determining resident payments for care. State law requires that residents
pay based on their financial ability. However, APH payment for care
determinations are not always based on residents ' full financial abil i ty
and may result in inconsistent treatment of some residents.
Law requires payment based on ability - Arizona Revised Statutes ( A. R. S.)
S41- 923 requires that people admitted to APH pay monthly fees for costs
incurred by the State for their care based on t h e i r a b i l i t y . The
requirement became law i n 1970. Requiring payment for care was a major
change in APH policy and applies to all people entering the home since
August 11, 1970.
A1 though the statutes do not define what constitutes a person's a b i l i t y to
pay, other public long- term care programs consider all net assets and net
income i n determining an appl icant's financial abil ity to pay. Because
the majority of the Home's residents are from Yavapai and Maricopa
Counties, we reviewed the long- term care programs of these counties. They
include all assets as well as income i n determining applicants' a b i l i t y to
pay for their orin long- term health care. If an applicant's t o t a l assets
or income exceed a specified amount, the county considers the applicant
able to pay for his own lona- term care, and thus will not provide
financial assistance.* In addition, both A1 aska and Wyoming pioneer homes
consider t o t a l assets and income in determining whether an applicant
should pay less than the maximum monthly fees. Only residents whose
income and assets are below specified amounts pay less than the full cost
of their care.**
APH does not include a l l assets i n determining a b i l i t y to pay - APH staff
generally exclude some assets i n determining a b i l i t y to pay. A1 though
written policy requires the Home to include all assets i n calculating a
resident's a b i l i t y t o pay, s t a f f generally exclude c e r t a i n a s s e t s that do
not produce income. Often excl uded nonincome- producing assets incl ude
real property and personal property such as automobiles. APH staff feel
that residents should not pay for care base+ on assets that produce no
actual income. Including nonincome- producing assets would require some
residents to use their liquid assets to pay for care, resul tins i n smaller
estates. However, because APH does not include these assets i n the
calculation, costs of supporting some residents unnecessarily s h i f t s to
State taxpayers. Accordinq to the Attorney General's s t a f f , all assets
should be included i n determining payment for care amounts. The potential
resident must then determine how to pay the amount.
Including all assets as required by APH policy would increase some payment
for care amounts. As prescribed by pol icy, applying an annuity factor to
A Yavapai County 1 imits assets to $ 30,000 ($ 5,000 may be cash) and
yearly income to $ 3,420. Garicopa County allows $ 9, P55 of income
yearly and up to $ 35,600 i n assets. Individual a s s e t s a r e 1 imited
to: home, $ 30,000; cash, $ 1,600; vehicle, $ 1,500; and 1 i f e insurance
cash value, $ 2,500.
** Further~ ore, the two states routinely f i l e claims on prior
residents' e s t a t e s f o r unpaid amounts. These unpaid or past due
amounts are the cumulative amounts rtot paid by a resident when the
resident did not pay either the determined payment for care amount
or the monthly maximum cost of care.
nonincome- producing assets woul d, i n some cases, i ncrease monthly
assessments.* In nine of the 18 resident recent admission f i l e s we
reviewed, incl uding such assets woul d have increased the residents '
individual monthly payment for care amounts between $ 12 and $ 573, for a
total of $ 2,269. Most of the payment increases resul ted from incl uding
residents' homes in the calculation.
In some cases, APtl staff have included these assets in determining
resident payments. However, inconsistent pol icy appl ication has resul ted
in inequitable payments among residents. For example, five of the 18
recently admitted resident files we reviewed listed a home as an asset on
the financial statement. In all b u t one case, payment for care amcunts
did not include an assessment on the home, based on the idea that the
residents should n o t or could not pay the additional assessed income on
their homes until they were sold or rented. In one case, however, the
resident's payment did incl ude such an assessment, increasing her monthly
payment by $ 449. The resident had $ 57,520 in liquid assets which enabled
her to pay the amount. Mokiever, two other ho~ eowners who had liquid
assets of $ 36,800 and $ 64,500 were not assessed for their homes.
APH Heeds To Strengthen Its
70 l i ci es And Adhere To Them
The Arizona Pioneers' Home needs to strengthen i t s payment for care
policies and improve adherence t o them. The Home lacks policies regarding
asset disposition prior to and during residency at APH. In addition, APH
does not verify resident financial information.
APH lacks policy over asset disposition - Policies do n o t address assets
disposed of prior to and during residency at APH. lihen a potential
* APH uses 1 ife insurance annuity factors to determine incope on
nonincorne- producing assets. This method assumes that the value of
nonincome assets remainin9 after allowances of $ 2,000 for burial and
$ 2,000 for personal property have been deducted are handled as if
converted t o cash and invested in a 1 ife annuity, thereby providin~
the resident a monthly income.
resident gives away or sells an asset a t unrealistically lord amounts, this
results in a lower payment for care. According to the Attorney General ' s
staff, assets sold or disposed of a t less than 75 to 80 percent of fair
d
market value should s t i l l be included as an asset i n determinina payment
for care. Our review of some resident files sho\.~ s that the lack of a
policy addressing this has, in fact, resulted in lost payment for care
revenues to APH.
Two recent examples i l l ustrate our concerns.
One resident's initial financial statement included a home and
other assets valued a t $ 72,400. Based on the reported values,
APH could have added $ 582 to the payvent for care amount.
Including this amount and other income listed on the financial
statement would have increased her monthly payments from $ 224 t o
$ 987. However, a t the time of her entrance into APH
approximate1 y one year after applying, the resident excl uded the
hone from an updated financial statement. The resident did not
report any increase in other assets or income based on selling or
renting the home.
e illore recently, another resident gave $ 20,000 of savings to a
relative, which reduced her monthly payments by $ 177.
Other states' pioneer homes have developed policies t o address this
probl en. In A1 aska, pol icy reads as fol lous.
. . . In determining assets . . . [ the Department] will
include the value of any assets or interest owned by
the applicant within 21 months preceding the date of
application i f the applicant save away the asset or
interest, or sold cr assigned the asset or interest at
less than fair market value. . . . This standard also
applies in determinincj continued residency [ at the
facility.]
biyorning also includes assets disposed of within 24 months prior tc
application in determining a resident's monthly care fee. In addition,
both Ihricopa and Yzvapai Counties ' 1 cnc- term care programs consider
assets disposed of three years prior t o application in deternining
el i cjibil i ty. The APH Superintendent agrees that controls are needed in
this area.
Financial information not verified - Unlike other public long- term care
programs, APH does not verify financial information. Although Arizona
Revised Statutes ( A. R. S. ) $ 41- 323. C require verification, APH staff do not
attempt to verify the accuracy of financial information reported by
potential residents. Rather, APH staff rely on the applicants'
statements. Payments for care calculated using unverified financial
information nay result in incomplete or incorrect assessments.
The practice of verifying financial information i s widely accepted i n
other public long- term care programs. Pioneer home staff in Alaska and
Wyoming verify financial information of residents who pay less than the
full cost of care. In addition, long- term care programs in Maricopa and
Yavapai Counties require appl icants to provide specific documentation of
financial data reported on appl ications. For example, confirmation
letters from pension organizations, banks and insurance agencies stating
pension mounts, savings and checking accounts and amounts, and the cash
value of insurance policies are necessary. An appl icant must a1 so obtain
property val ue statements from the County Assessor Is Office.
COMCLUS ION
APH needs to more accurately determine resident payments for care.
Current Apt4 pol icies and procedures do not conform wi tt! leaislative
intent. To comply, the Pioneers' Home st\ ould strengthen and adhere to i t s
payment for care policies and process.
1. The Pioneers' Home should revise i t ' s current policy to clearly define
the assets to be included in payment for care determinations. Cnce
developed, APH staff should adhere to this policy.
2. APH should comply with A. R. S. $ 41- 923 by developing anc! following
procedures for verifying appl icant financial infor~ ation.
3. APH should establish a policy of including in payment for care
determinations the fair market value of assets disposed of within a
specified period of tine prior t o admission or during residercy a t APH.
OTHER PERTIf4ENT INFORMATION
During our audit, we developed other information pertinent to the personal
allowance deduction used in determining resident payment for care amounts.
Arizona Pioneers1 Home ( APH) policy allows residents to keep $ 140* of
their monthly income for personal expenses. In cal cul ating payment for
care, APH staff deduct this amount from a r e s i d e n t ' s t o t a l available
income. Residents spend this allowance as they choose, generally for
items 1 ike t o i l e t r i e s , clothing and hair care.
In comparison to other long- term care programs, APH1s deduction may be
high. Both the Yavapai and Maricopa County long- term care assistance
program allowances are $ 50.40 a month, based on current Federal Social
Security amounts. In addition, both Alaska and Wyoming pioneer home
allowances are less than that of APH: biyoming residents keep $ 65 of the
f i r s t $ 75 of monthly income and 15 percent of income above $ 75. Alaska
provides a $ 100 personal allowance for i t s pioneer home residents.
The Eome c o ~ ~ lidnc rease payment for care receipts, and thus General Fund
revenues, by reducing the personal a1 1 owance deduction. For example, i f
APH reduced i t s allowance to $ 100, payment for care receipts would
increase by approximate1 y $ 71 ,000 a year .** Thi s amount woul d increase
payment for care receipts to the General Fund by 13 percent. This amount
i s equal to approximately 2.5 percent of APH operating expenditures during
fiscal year 1986.
- 0 allowance was f i r s t established and l a t e r increased to $ 135 by
the Department of Health Services ( DHS) while APH was under DHS during
the mid- 1970s. The current $ 140 amount was establ ished i n the late
1970s.
** Auditor General s t a f f calculated this amount by multiplying the
estimated average resident population by the increase of $ 40 a month
for a one- year period. This estimate excludes miners and residents
w i t h no income.
AREA FOR FURTHER AUDIT WORK
Should the Pioneer's Home Seek AHCCCS Reimbursement for Pesident Medical
Care?
The Arizona Pioneers' Home does n o t receive reimbursement from the Arizona
Health Care Cost Containment System ( AHCCCS) for mec'ical care provided t o
residents. b; hen AHCCCS was instituted, APH sent a test case t o assess the
resident's AHCCCS el igibil ity . According t o an APH administrator, AHCCCS
determined that APH residents were not eligible because they were already
receiving a State subsidy. AHCCCS staff recently indicated that this
informal pol icy s t i l l appl ies. Further~ ore, determining el igibil i ty of
current residents waul d be di fficul t because of unverified financial
information and unavailable medical expense records. Further audit work
i s needed to determine whether the informal policy is appropriate, how
many residents may qua1 ify for P. HCCCS, what procedures APH wo~ ldl need to
develop to obtain payment and the cost- benefit of seekino AHCCCS
rei~ bursernent.
preerott, prironn 85301
November 20, 1986
Douglas R. Norton
Auditor General
Office of the Auditor General
2700 N. Central Avenue, Suite 700
Phoenix, Arizona 85004
Dear Mr. Norton:
Enclosed is our response to the Revised Draft
Report of the Performance Audit of the Arizona
Pioneers' Home conducted by your department.
I sincerely appreciate the cooperation from
your staff, should you or they have any questions
on the response please do not hesitate to contact
me.
Sincerely,
" r, I - 7 / LL Y A i f i ~ c - , ~
~ e$ le L. Farmer
Superintendent
IJLF : j f
Enclosure
Reponse
to the Performance Audit of the
Arizona Pioneers' Home
Conducted by the Office of the Auditor General
We are in agreement with the basic idea in each of the three
findings of the study:
( 1) The concept of the Arizona Pioneers' Home should be
reviewed by the Legislature. However, there are several
reasons why we feel there is justification to continue
the Home.
( 2) Proper use of the Disabled Miners' Hospital Endowment Fund
needs to be clarified. Congressional change of the
Enabling Act is the best approach so that we may come into
compliance with requirements.
( 3) There is need to improve payment for care determinations
and disposition of assets by applicants and residents.
We are in the process of proposing Rules to establish
these guidelines.
FINDING I: The Need for the Pioneers' Home Is Changing
The definition of a pioneer used in the report is that
used by the Arizona Historical Society, which restricts a
pioneer to an individual who arrived in the State before 1912.
The original statute establishing the Pioneers' Home required
an applicant to " have been active in the development of Arizona."
Although this wording was dropped in 1970, original legislative
intent does not indicate that contributions to the development
of Arizona will likely cease at a particular date and did not
anticipate the need for arranging to close the Home after a
certain generation had expired.
When the town of Prescott welcomed the building of the
Pioneers' Home in 1910 and its citizens donated the land upon
which it was to be built, no one foresaw a day when any use
other than this would be made of the land or the building other
than as a real home for citizens of Arizona ii~ their sunset years,
In fact, the deed for the land upon which the Pioneers' Home
standscontainsa restriction that it is " to be used by the said
Territory as a location upon which to construct a Xome for the
Pioneers of said ~ erritory, and for no other purpose." If
they had known that some other use for it would eventually
develop, they might have reconsidered their generosity. If the
Home were to be discontinued, a similar change in the Enabling
Act would have to be made as that anticipated for the Disabled
Pliners' Hospital since lands and funds were set aside in the
Enabling Act for the establishment and operation of the
Pioneers' Home.
It is true that there are always more residents in the
Home from Yavapai County than from any other one county, as
would be true no matter what its location. People who grow
up being more familiar with its presence are naturally more
likely to think of applying for entrance in later years.
However, if one considers the county of residence to which
the individual came when he or she originally entered Arizona,
and in which he is more likely to have spent his productive
years, the distribution of the present population at the
Pioneers' Home shows a different result to that showing only
the county in which the resident lived at time of retirement
just prior to entering the Home. As Figure 1 indicates, r)
Yavapai then has 35% of the residents, Maricopa 328, 6% each
for Coconino and for Gila, 5% for Pima, and 16% for the
remaining counties. Also, considering overall need, if the
population of elderly within each county is compared to the
county's total population, it is found that one of every 4.4
individuals ( 22.5%) of Yavapai's population consists of
individuals 65 years or older; one of every 8.2 ( 12.2%) of
Maricopa's total population; one of every 7.6 ( 13.1%) of
Pima's total population; one of every 19.2 ( 5.2%) of Coconino's
total population; and one of every 8.4 ( 11.9%) of the remaining
counties' total population.
Pima
Coconino Gila 5 &
6 % 6 8
Residence at Time of Entrance to Arizona
FIGURE I
Information regarding the Pioneers' Home is equally
available to all counties and to all legislators, but if desired
an advertising method to keep the availability of the Home
before all residents of the State could be devised. There is
always a fairly lengthy waiting list of applicants, and this
would also have to be included in the advertising since the
waiting list could conceiveably grow still longer. If care-fully
monitored, a priority list by county according to elderly
population distribution could be developed for processing the
waiting list. Direction to do this should come from the
Legislature.
Yavapai County and especailly the Prescott area would
naturally feel the closing of the Home very deeply. Approxi-mately
300 people would be affected if the 136 individuals
employed there were to be dismissed and enter the job market in an
area in which jobs are almost non- existent. Their support of
the local economy affects an additional circle of businesses
and people. The Home itself does the major part of its pur-chasing
through other than local sources, however, due to
State Purchasing contracts, but the 153 residents and their
families would be most directly affected. As the report indi-cates,
their release would certainly over- tax the resources of
Yavapai County to support, even if all were returned to the
counties from which they entered. The State has a definite
commitment to the current residents, as the report also states,
since they entered with the understanding that they had a " home
for life." At the request of the auditors, we developed a
break- down of our expenses per day for a resident in personal
care and for a resident in skilled care. These compared favor-ably
with similar charges in private facilities ($ 39.35 in
personal care and $ 58.18 in skilled care), although our costs
also included those for doctors and drugs which were additional
expenses to the individual at private facilities.* Using these
figures, plus our average loss per year of 25 residents by
death, it is easy to see that there would likely be a substan-tial
financial obligation for at least another six or seven
years for this current population. Arrangements would also
have to be made to care properly for the miners now here
during the years involved to get the nabl ling Act changed as
suggested for the Miners' Xospital.
* If only the money appropriated from the General Fund, less
the money returned to it from Payment for Care, divided by the
number of residents, the cost to the State per resident per
month averages $ 965.00.
The Pioneers' Home is not required by statute to be
licensed but is required to be surveyed every six months by
the Department of Health Services and a response to any
deficiences noted sent to the Health Department, the Governor,
and the Legislature with plans to correct the deficiencies.
These surveys consistently praise the Home and its staff for a
their care of the residents and their compliance with regula-tions.
As with any older structure, comparison with require-ments
for new construction puts the older structure in a very
bad light. However, not all old structures are abandoned
because of this. Constant maintenance and renewal projects are
underway at the Home for its safety, sanitation, and comfort. 0
During this current year the oldest portions of the brick walls
have had the mortar repointed, and the fire ramps have been
widened to facilitate residents' exiting of the structure during
an emergency. The example of the bathrooms not all having
mechanical ventilation ( as required in new structures) fails
to mention that all which lack mechanical ventilation have an a
outside window.
A long- range plan for renewal and maintenance of the
building is under way with the State's new building renewal pro-gram.
If the Department of Health Services wishes the Pioneers'
Home to establish an additional program to meet any specific a
standards they set, we will be glad to comply with all reasonable
and possible requests. The environment of the Pioneers' Home
has always been more " homey" than " sterile" and has seemed in
this regard to be more comfortable for those seeking residency
here. All standards of safety and sanitation must most assuredly
be met, but kind and loving care by the best trained personnel a
will continue to receive the greatest emphasis. There are
numerous instances in which the doctor treating a resident at
the hospital has released the resident to return " Rome" so he
or she could receive the best care available instead of remaining
in the hospital for the usual period of recuperation. The
Pioneers' Xome was not established as a nursing home but as a •
retirement home for the pioneers. It is true that an abundance
of applications for admission are from individuals who really
require a nursing home at that time. Acceptance of these
individuals at this stage of decline would swiftly turn the
Pioneers' Home into a nursinghorne, but careful regulation of
entrance requirements will prevent this so that the 64 bed
skilled care infirmary willaccom~ odatethose residents who have
been relatively independent upon entering but eventually develop
the need for skilled nursing care.
FINDING 11: The Arizona Pioneers' Home Inappropriately Expended
Money from the Miners' Hospital Endownment Fund
It has long been a known fact that Arizona did not construct
a separate hospital facility for miners as directed in the
statutes in 1929, although as the report explains, the miners
have been cared for in every way in the Arizona Pioneers' Home
except for actual hospital ( usually surgical) procedures, at
which time their care was provided and paid for at the Yavapai
Regional Xedical Center. Since an actual hospital was never
built, the results of the New Mexico court decision have placed
a somber light on the Arizona situation. There are, however,
a few notable differences between the two cases.
In New Mexico a hospital for miners w- as constructed but
was later discontinued, whereas in Arizona there has never been
a change in how the miners have been cared for since the first
legislation concerning them. When the hospital in New Mexico
lost its surglcal status, it was dropped to a facility pro-viding
only intermediate care, not skilled care as APH prcvides.
The funds provided in the Enabling Act to establish the hospital
and care for the miners were combined with other New 1v: exico
State health care funds, and money for the care of miners then
was taken from this general fund. The Enabling Act give
specific instructions to both States that the miners' money
is to be kept in a separate fund. In Arizona the funds provided
for the care of miners has always been kept as a separate endow-ment
fund, and expenditures from this fund can therefore be more
easily traced and accounted for.
As apparently was the case in New Mexico, there have been
relatively few miners to apply for residency over the years.
If the Enabling Act had been complied with " to the letter,"
it is interesting to speculate on the amount that would have been
expended to have built a " complete" surgical hospital and to have
staffed it for full services from 1929 until the present, regard-less
of how few were served by it. There has never been a guide-line
to follow for specific expenditures from the : liners1
Hospital Endowment Fund, and each Superintendent has tended to
follow the tradition of what was done in the past.*
In recent years, this has meant that all medical expenses
for either miners or pioneers were taken from the fund, as well
as any expenses for personal services or employee related
expenses which exceeded the funds appropriated from the General
Fund. A11 remaining expenses for the care of the miners was
taken from the Pioneers' Home Endowment Fund.
* All expenditures from this fund, however, have been appro-priated
by the Legislature by a footnote in the Appropriations
Bill.
At present we are attempting to develop a cost allocation
per miner to be applied to each miner's care at the Pioneers1
Home and to use this as a rationale for total expenditures from
the 14iners1 Hospital Endowment Fund. If no funds at all are
to be spent from this fund, it will be necessary to request
that additional funds be appropriated from the General Fund by a
the Legislature for the operation of the Pioneers1 Xome for the
miners and the other residents.
FINDING 111: The Arizona Pioneers' Home Needs to Improve Its
Payment For Care Determinations @
From the beginning of the Pioneers1 Home in 1911 until 1970
no resident paid for his care at the Hone. There was no indi-cation,
either, that the Home was established for the indigent
but more as a retirement home where the pioneers could enter
with dignity. In 1970 the Statutes were changed to require
that each resident pay " according to his ability to pay." The
details to implement this have never been addressed formally
or the extent of authority determined. Rule making authority
is not directly delegated in the Statutes and, therefore, has
never been pursued. Recent advice from the Attorney General,
however, is that the Arizona Pioneers' Home does have implied 0
authority to propose and adopt Rules. Therefore, the staff
of the Home is currently in the process of constructing Rules
which we believe will assure consistency and fairness as they
define procedures in each area.
These proposed Rules will attempt to define clearly the
assets to be included in payment for care determinations and
the method of assessing them; the disposition of assets by
residents prior to admission and during residency at APH; and
procedures for verifying applicant financial information. As
soon as possible, these Rules will be proposed and, hopefully,
adopted so they can be rnade a part of the routine admissions
procedure. If all the financial information provided by each
applicant and each resident is to be thoroughly verified, it
appears that additonal staff will be required to accomplish
this.
M E M O
July 15, 1986
TO: Douglas R. Norton, Auditor General
FROM: Arizona Legislative Council
RE: Request for Research and Statutory Intrepretation ( 0- 86- 5)
This memo is sent in response to a request made on your behalf by William
Thomson in a memo dated July 3, 1986.
FIRST FACT SITUATION:
Arizona Revised Statutes, ( A. R. S.) section 41- 941, subsection A provides that:
There shall be a state hospital for disabled miners adjacent to the
~ r i z o n api oneers' home at Prescott which shall be managed by the governor.
The State of Arizona Enabling Act ( Act June 20, 1910, c. 310, 36 U. S. Stat. 557, 568- 579,
( section 25) provides for lands to be held in trust " for miners' hospitals for disabled miners,
I, fifty thousand acres. . . . I' An additional grant of fifty thousand acres was made by Act
February 20, 1923, c. 280, section 2, 45 U. S. Stat. 1252 for the same purpose.
Section 28 of the Enabling Act states that lands granted by the United States to
t h e S t a t e of Arizona are held in trust and are " to be disposed of in whole in or in part on1
in manner as herein provided and for the several objects specified". ( Emphasis added
Furthermore, this section states that disposition of any of these lands, or of any money or
thing of value derived therefrom, for any object other than for that which has been
provided is considered to be a breach of trust.
Arizona has never established a miners' hospital. Miners have been and continue to
be admitted t o t h e Pioneers1 Home instead. The Pioneers' Home is not licensed or
certified as a nursing home nor is it licensed or certified as a hospital. Monies from the
Miners' Hospital Endowment Fund have been expended for t h e c a r e of all residents at the
Pioneers' Home, The fund is presently used for all medical expenses incurred by residents
of the Home, as well as for personal services and Employee Related Expenses ( ERE) not
otherwise provided for in the general state appropriation.
In rhe past the fund was primarily used for personal services and ERE; however, it
was also used for capital improvement projects and other operating expenses. The Home
currently has one hundred fifty- three residents, six of whom are miners.
Arizona's Enabling Act is similar to the Enabling Act for the State of New Mexico
which also provides " for miners' hospitals for disabled miners, fifty thousand acres. . . " of
trust land. An additional granr of fifty thousand acres of land was also made. In 1971 the
( United States of America sued the State of New Mexico over its Hospiral for Disabled
Miners. The United States District Court for the District of New Mexico ruled that the
( State had inappropriately used monies from its Disabled Miners Endowment Fund and
ordered that the fund be restored. Memorandum Opinion No. 9484 Civil, 1974. In
addition, in a ruling on a motion for clarification of judgment, the Court ruled that New
Mexico had to establish a certified hospital ward for the care of miners in the Miners'
Hospital.
QUESTIONS PRESENTED:
1. Is the use of the Miners' Hospital Endowment Fund, as described in the f a c t ( I
situation, inappropriate?
2. Based upon the Enabling Act and the Court's reading of the intent of that Act as
evidenced in the New Mexico case, should there be a certified hospital facility for
disabled miners in Arizona?
ANSWERS:
1. Yes.
2. Yes.
DISCUSSION:
In addition t o t h e limitations on the use of monies derived from the land grant as
stated in the fact situation, section 28 of the Enabling Act also provides that:
A separate fund shall be established for each of the several objects
for which the said grants are hereby made or confirmed, and whenever any
monies shall be in any manner derived from any of said land the same shall
be deposited by the state treasurer in the fund corresponding to the grant
under which the particular land producing such moneys was by this Act
conveyed or confirmed. No money shall ever be taken from one fund for
deposit in any other, or for any object other than t h a t f o r which the land
producing the same was granted or confirmed. ( Emphasis added.)
The language of the Enabling A a is clear and direct in restricting use of the trust
fund to the Uiners' Hospital. Monies derived from the land trust that have been and are
currently used for the Pioneers' Home and its residents appear to be inappropriate
expenditures in violation of the trust. This interpretation of the Enabling Act is supported
by the judgment in the New Mexico case, affirmed on June 22, 1976 by the Tenth Circuit
Court of Appeals in United States v. State of New Mexico, 536 F. 2d 1324, in which the
Court stated:
Since the purpose of the trust was to establish and to maintain a
" miners' hospital," the provisions requiring that the trust funds only be
expended for the trust purpose are to be literally construed. This literal
conseuction means that trust funds cannot be spent at other hospitals even
though such money is being used to provide health care for miners.
The Enabling Act is not as clear as to whether a certified hospital facility for ( disabled miners is required in Arizona. The Act does set aside land whose proceeds a r e t o
be used for that purpose. Neither the Act nor the Arizona Constitution, however, requires
specifically that a miners' hospital be established. The State Hospital for Disabled Miners
was established by the Legislature in 1929 " to be built adjacent to the Pioneers1 Home" at
the time of the second land grant by Congress for the hospital, but that was nineteen
years after the Enabling Act.
Despite this apparent lack of a mandate to actually establish a facility, the
District Court in the New Mexico opinion cited above ( based on identical language in the
Enabling Act of that State) found that "/ 7he plain meaning of the words requires the
establishment and maintenance of a separate hospital facility for the benefit of resident
miners of the state." Furthermore, the Court held that such a facility must be a
certified, fully accredited general hospital providing surgical care.
Absent any other law or opinion on this issue, this case ( affirmed by the Tenth
Circuit Court of Appeals) would lead to the conclusion that a certified hospital facility
should be established for disabled miners in Arizona. It should be noted, however, that a
court challenge on this issue in Arizona would be appealed to the Ninth Circuit Court of
Appeals with potentially different results.
SECOND FACT SITUATION:
A. R. S. section 41- 942 establishes qualifications for admission to the Miners'
Hopsital which require that the person:
1. Has followed the occupation of mining for twenty years in the
state.
3. Has been a resident of the state for not less than thirty- five
years.
4. Has reached the age of sixty years or more, and is financially
unable to support himself, or has suffered incapacitating injuries arising
from and in the course of mining.
A. R. S. section 41- 923, subsection A establishes qualifications for admission
to the Arizona Pioneers' Home which require that the person:
1. Is and has been for a period of five years prior to his application
for admission, a citizen of the United States and of this state.
2. Has been a continuous resident of this state for not less than
thirty years.
QUESTIONS PRESENTED:
1. Does A. R. S. section 41- 942, paragraph 4 conforrn to the intent of the Enabling
Act of Arizona, which provides trust lands for a miners1 hospital for disabled miners, by ' C limiting admission to the hospital to miners over sixty years of age?
2. Does A. R. S. section 41- 942, paragraph 1 conform to the intent of the Enabling ( Act of Arizona by limiting admission to persons who have " followed the occupation of
mining for twenty years in the state"?
3. Are residency requirements set forth in admission qualifications for the Arizona
Pioneers1 Home ( A. R. S. section 41 - 923, subsection A, paragraphs 1 and 2) and the Hospital
for Disabled Miners ( A. R. S. section 41- 942, paragraph 3) constitutional?
ANSWERS:
See discussion.
DISCUSSION:
The Enabling Act providing trust land " for miners' hospitals for disabled miners"
does not appear to create any intent by Congress regarding admission requirements for
the hospitals other than disability. Apparently, the hospital admission criteria were left
to t h e S t a t e to decide. The Arizona Constitution and case law are also silent on this
issue. Arguably, disability could include age as well as physical incapacity. Therefore,
the answer to the first two questions of this fact situation is t h a t t h e admission criteria
established by the Legislature in A. R. S. section 31- 941 appear t o be valid absent other
legal restrictions.
As for the citizenship and residency requirements for admission t o t h e Home or
Hospital, severai United States Supreme Court decisions cast some doubt on their
H constitutionality.
( k Shapiro v. Thompson, 394 U. S. 618 ( 19691, involved a residency requirement and a
one- year waiting period for welfare assistance in Connecticut, Pennsylvania and the
District of Columbia. The Court observed that these requirements created two classes of
needy citizens which were indistinguishable except for the amount of time they had been
residents. When a s t a t e distributes benefits unequally, the courts examine the law under
the Equal Protection Clause of the Fourteenth Amendment to the United States
Constitution which provides that no s t a t e may deny any person the equal protection of the
laws. A law may be valid even if it distinguishes among residents, if it promotes a
( 1 compelling governmental interest". The Court in Shapiro concluded that a waiting period
for welfare assistance constituted discrimination and denied citizens equal protection of
the laws.
Similarly, in the case of Memorial Hospital v. Maricopa County, 415 U. S. 250
( 1974), an Arizona law requiring a year of residency for eligibility for county medical
assistance was invalidated by the Court as a violation of the Equal Protection Clause and
as impinging on the right of interstate travel by denying newcomers the right to basic
necessities of life.
Both Shapiro and Memorial Hospital, however, involved needy or indigent citizens'
rights. A distinction in the Arizona Pioneers' Home and Miners' H o s ~ i t a is ituation is that
admission is not limited to needy people but is limited to those who have resided in this
State for a long time.
( The United States Supreme Court has invalidated a law of Alaska that allowed a greater dividend from state oil income to be given to citizens who had lived in that State
a longer time. Zobel v. Williams, 457 U. S. 55 ( 1982). The Court ruled that providing
greater benefits to people based on length of residency was violative of the Equal
Protection Clause. This case is closer t o t h e situation regarding the Pioneers' Home and
Miners' Hospital because indigency is not a factor. However, a significant distinction in
all the Supreme Court cases to date from our fact situation is that neither the Pioneers1
Home nor the Miners Hospital is the only source for care in this State. Arizona citizens
have many care and hospital facilities to choose from. The complainants in the cases
above had no alternatives.
As questionable as the residency requirements for admission t o t h e Pioneers' Home
or Miners' Hospital may be under the foregoing decisions, it is impossible to second- guess
a court as to the constitutionality of our requirements under the unique facts as presented
in Arizona. Until a court . determines whether our residency requirements further a
legitimate state interest, the statutes must be complied with.
THIRD FACT SITUATION:
A. R. S. section 41- 923, subsection A, paragraph 4, which concerns admission
qualifications to the Arizona Pioneers' Home, provides that:
Because of adverse circumstances, failing health or other disability is
unable to provide himself with the necessities and ordinary comforts of life.
( Emphasis added.)
@ ( Presently a number of residents at the Home have the financial means and ability to
provide for themselves.
QUESTION PRESENTED:
Does A. R. S. section 41- 923, subsection A, paragraph 4 mean that persons
I) financially able to provide for themselves do not qualify for admittance to the Home?
ANSWER:
No.
DISCUSSION:
In determining legislative intent, it has been stated t h a t t h e meaning which
naturally attaches t o t h e words used and best harmonizes with the context should be
adopted. State v. Miller, 100 Ariz. 288? 413 P. 2d 757 ( 1966). The language used in this
paragraph requiring a resident of the Home to be " unable to provide himself with the
necessities and ordinary comforts of life" does not appear to be limited to being
financially unable to do so. If the Legislature had intended to restrict admission to the
Home to indigents they could have easily set up financial standards to be applied for
admission. The language here is broader.
"/ Vdverse circumstances, failing health or other disabilityw could also involve, for ( exampl~- provision of help to overcome a physical disability. This interpretation of the
statute is supported by the language of A. R. S. section 41- 923, subsection D which requires
a person who is admitted to the Home to pay the State for the cost of his care to the
extent possible. If financial inability to care for oneself is a requirement for admission,
this provision would not be included in the law.
CONCLUSION:
The use of the Miners' Hospital Endowment Fund for any purpose other than care of
disabled miners in a miners' hospital is inappropriate. A separate certified hospital for
disabled miners should be established in Arizona in accordance with the Enabling Act.
However, admission requirements for such a hospital, other than the requirement of being
a disabled miner in this State, are left to the Legislature to determine,
Although residency requirements for admission to the Pioneers' Home and Miners'
Hospital may be questioned under constitutional doctrines enunciated in recent United
States Supreme Court decisions, it is not possible to predict a court decision on this issue
with certainty. --
Finally, A. R. S. section 41- 923, subsection A, paragraph 4 does not limit admission
to the Pioneers' Home to those who do not have the financial ability to provide for
themselves.
CC: William Thomson, Manager < Performance Audit Division